September 13, 2016
by Regina M. Slowey
Orlans Associates, P.C. – USFN Member (Michigan)
The decision in Residential Funding Co, LLV v. Saurman, 490 Mich. 909, 805 N.W.2d 183 (2011), verified that whether or not the mortgagee of record also owned the underlying note was immaterial to the right of that mortgagee to foreclose. Recently, the Michigan Court of Appeals expressly reaffirmed this right in a judicial foreclosure case.
In Select Commercial Assets, LLC v. Carrothers, the Court of Appeals (in an unpublished opinion) confirmed that the Saurman analysis applies to judicial foreclosures as well. [Select Commercial Assets, LLC v. Carrothers, No. 326968 (June 21, 2016)]. In particular, the appellate court ruled in a judicial foreclosure case that a mortgagee of record has the standing and capability to foreclose where there is undisputed evidence that the mortgage-secured debt is in default, regardless of the ownership of the note. The court ruled that the defendant-borrower’s arguments that the plaintiff must be the owner of the debt secured by the mortgage to bring a judicial action to foreclose were without merit.
This eases the burden for foreclosing entities that must use judicial action for a particular mortgage. The evidence must show that the underlying loan is in default, but similar to a foreclosure by advertisement, the foreclosing entity need only be the mortgagee of record, not the holder/owner of the note.
Editor’s Note: The author’s firm represented the plaintiff-appellee before the Michigan Court of Appeals in Select Commercial Assets, LLC v. Carrothers.
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