November 25, 2014
by Brian P. Dowgiallo
Orlans Associates, PC – USFN Member (Michigan)
On October 16, 2014, the Michigan Court of Appeals affirmed a trial court’s ruling, dismissing a borrower’s post-foreclosure challenge. In Diem v. Sallie Mae Home Loans, Inc. f/k/a Pioneer Mortgage, Inc., Docket Number 317499, the Court of Appeals reaffirmed the elements set out by the Michigan Supreme Court in Kim v. JPMorgan Chase Bank, NA, 493 Mich. 98. 115-116; 825 NW2d 329 (2012).
Kim requires that a borrower seeking to set aside a foreclosure by advertisement allege facts of: (1) fraud or irregularity in the foreclosure procedure; (2) prejudice to the borrower; and (3) a causal relationship between the alleged fraud or irregularity and the alleged prejudice (i.e., that the borrower would have been in a better position to preserve the property interest absent the fraud or irregularity). The Court of Appeals concluded in Diem that the borrower failed to allege a causal connection between the alleged fraud or irregularity in the foreclosure procedure and any ability the borrower had to preserve his property interest. Accordingly, the trial court’s dismissal of the borrower’s challenge was affirmed.
While not a landmark opinion in the Michigan foreclosure community, Diem is still a significant published judicial decision. It reaffirms the high standard that the borrower must meet in attempting to challenge the foreclosure. That the Court of Appeals has chosen to publish the decision is noteworthy, perhaps evidencing that the court is growing tired of the boilerplate arguments used in challenging foreclosures over the past few years. Furthermore, the court continues to stress that regardless of whether or not there was an actual foreclosure violation, if the borrower fails to show any harm or prejudice as specified in the above-cited Kim decision, those matters must be dismissed. The Diem opinion certainly seems to support the belief that the law in Michigan is settled when it comes to post-foreclosure challenges.
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