Home > Uncategorized > Mortgage Holders, Investors, and Agents: New Case Law Definitively States No Standing After Redemption Period?

Mortgage Holders, Investors, and Agents: New Case Law Definitively States No Standing After Redemption Period?

A case decided April 10th may cut off any claims of wrongful foreclosure by a homeowner after the expiration of redemption period.

 

The Case is Glenna Bryan v JP Morgan Chase,Docket No. 313279 (April 10, 2014, Mich Ct App)

 

There, the Court of Appeals noted that:

 

Defendant argues that plaintiffs lacked standing to bring this action because the statutory redemptive period had expired and plaintiff made no effort to redeem the property. We agree.

 

 

I. Michigan Redemption Statute

 

Pursuant to MCL 600.3240, after a sheriff’s sale is completed, a mortgagor may redeem the property by paying the requisite amount within the applicable prescribed time limit, which here was six months.

Unless the premises described in such deed shall be redeemed within the time limited for such redemption as hereinafter provided, such deed shall thereupon become operative, and shall vest in the grantee therein named, his heirs or assigns, all the right, title, and interest which the mortgagor had at the time of the execution of the mortgage, or at any time thereafter….” MCL 600.3236.

 

If a mortgagor fails to avail himself of the right of redemption “all plaintiffs’ rights in and to the property [are] extinguished.” Piotrowski v. State Land Ofice Bd, 302 Mich. 179, 187; 4 NW2d 514 (1942).

 

 

II. What about Exceptions for Fraud or Extreme Irregularity?

 

 

Arguments have been made by foreclosed on property owners after expiration of redemption that the sale should be set aside for extreme irregularities or fraud, citingKim v. JPMorgan Chase Bank, N.A., 493 Mich. 98, 115, 825 N.W.2d 329, 337 (2012) reh’g denied, 493 Mich. 962, 828 N.W.2d 678 (2013)The Michigan Supreme Court has held that a foreclosure may be set aside for fraud or extreme irregularity, or some peculiar exigency, to warrant setting a foreclosure sale aside.”

 

The Bryan Court did not find this argument possible after redemption has expired.

 

 

III. Bryan Cites a String of Cases – holding a mortgagor lacks standing after redemption expires.

 

“We have reached this conclusion in a number of unpublished cases and, while unpublished cases are not precedentially binding, we find the analysis and reasoning in each of the following cases to be compelling…Accordingly, we adopt their reasoning as our own. See Overton v. MERS, unpublished opinion of the Court of Appeals, issued May 28, 2009 (Docket No. 284950) (“The law in Michigan does not allow an equitable extension of the period to redeem from a statutory foreclosure sale in connection with a mortgage foreclosed by advertisement and posting of notice in the absence of a clear showing of fraud or irregularity … Once the redemption period expired, all of plaintiff’s rights in and title to the property were extinguished.”);

 

Hardwick v. HSBC Bank USA, unpublished opinion per curiam of the Court of Appeals, issued July 23, 2013 (Docket No. 310191) (“Plaintiffs lost all interest in the subject property when the redemption period expired…. Moreover, it does not matter that plaintiffs actually filed this action one week before the redemption period ended. The filing of this action was insufficient to toll the redemption period….Once the redemption period expired, all plaintiffs’ rights in the subject property were extinguished.”);

 

BAC Home Loans Servicing, LP v. Lundin, unpublished opinion per curiam of the Court of Appeals, issued May 23, 2013 (Docket No. 309048) (“[O]nce the redemption period expired, [plaintiff’s] rights in and to the property were extinguished….Because [plaintiff] had no interest in the subject matter of the controversy [by virtue of MCL 600.3236], he lacked standing to assert his claims challenging the foreclosure sale.”);

 

Awad v. Gen Motors Acceptance Corp, unpublished opinion per curiam of the Court of Appeals, issued April 24, 2012 (Docket No. 302692) (“Although she filed suit before expiration of the redemption period, [plaintiff] made no attempt to stay or otherwise challenge the foreclosure and redemption sale. Upon the expiration of the redemption period, all of [plaintiff’s] rights in and title to the property were extinguished, and she no longer had a legal cause of action to establish standing.”).

The Court concluded by stating plainly:

“We hold that by failing to redeem the property within the applicable time, plaintiff lost standing to bring her claim.”

IV. Takeaway

 

Could this case be the end of any wrongful foreclosure lawsuit brought by property owners at or near the end of redemption period?

 

If I am lender/investor’s counsel I cite this case and argue that exact point.

 

Questions? Comments?

 

Email: Jeshua@dwlawpc.com

http://www.dwlawpc.com

 

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