Michigan Supreme Court Reverses Ruling on MERS' Right to Foreclose
By: Carrie Bay
The Michigan Supreme Court issued a ruling Wednesday stating that MERS, as record-holder of the mortgage, does have the right to initiate foreclosures in the state.
The decision reverses an April ruling from the Michigan Court of Appeals, which called into question thousands of foreclosure actions in which MERS was named as the foreclosing party.
The appellate court’s earlier judgment sent shockwaves through the distressed housing market in Michigan, with title companies refusing to handle bank-owned homes in which MERS was involved, and HUD instructing its mortgagees to re-file foreclosures that had initially been carried out in MERS’ name.
Randall S. Miller, Esq., of the law firm Randall S. Miller & Associates in Bloomfield Hills, Michigan, says with the higher court’s ruling, it’s anticipated that all title underwriters’ files that had been foreclosed in the name of
MERS can now proceed, and any litigation challenging the validity of a foreclosure based on the lower court ruling will now be dismissed.
“In its decision, the Supreme Court clearly stated that MERS, by virtue of its status as mortgagee, has an ownership interest in the indebtedness secured by the mortgage, and therefore has standing to bring a non-judicial foreclosure action,” Miller explained.
The previous Michigan Court of Appeals ruling did not apply to judicial foreclosures conducted by MERS, only to non-judicial “foreclosure by advertisement,” which allows creditors’ to foreclose after they post a notice of default in a newspaper for four consecutive weeks.
The state’s Supreme Court decision validates MERS’ right to foreclose both judicially and non-judicially by advertisement.
“The Supreme Court’s decision affirms MERS business model and will allow the Michigan real estate industry to get back to business as usual,” said Bill Beckmann, president and CEO of Merscorp, the parent company of MERS.
“This will allow homeowners to resolve title issues and buyers to move forward with the purchase of foreclosed properties, which is good for neighborhood stability,” Beckmann continued. “The [appellate court’s] ruling caused considerable confusion, delayed property transactions, and triggered unnecessary litigation.”
In the Supreme Court’s order, the justices stated that the Court of Appeals’ decision “erroneously construed” Michigan’s law governing real property.
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