MERS Wins Two Michigan Suits

The right of Mortgage Electronic Registration System, Inc. (MERS) to act as mortgagee of record for mortgage investors has survived two more court challenges, this time in separate decisions in the U.S. District Court for the Eastern District of Michigan.  In the first case, Collins v. Macomb County Sheriff, Judge Patrick J. Duggan said MERS assignment of a mortgage to Wells Fargo,  "is plainly satisfactory to establish a record chain of title" required by Michigan's foreclosure statute.  He cited the Michigan Supreme Court's decision in Residential Funding Co., LLC v. Saurman that, as MERS has a right to foreclose by advertisement where it is the mortgagee as nominee for the lender then MERS was therefore able to assign the same right to Wells Fargo.

Dugan also cited previous cases in denying the right of the plaintiffs to even bring the suit on the grounds that "a litigant who is not a party to an assignment lacks standing to challenge that assignment."  The standing of a plaintiff, usually either the party who was foreclosed or a local government official claiming a usurpation of authority by MERS, has been an issue in which MERS has prevailed in several other states.

In the second suit, McLaughlin v. Chase Home Finance, Judge Lawrence P. Zatkoff rejected the plaintiffs' claims of fraud, wrongful foreclosure, and violations of the Fair Debt Collection Practices Act (FDCPA) by MERS and Chase Home Finance.   Zatkoff also cited the Saurman decision, writing that "MERS is statutorily authorized to foreclose by Advertisement...[t]hus, to the extent that [plaintiffs] rely on the Court of Appeals' ruling in Saurman, Plaintiffs' arguments fail as a matter of law." The judge also rejected the plaintiffs' allegations that MERS could not be a mortgagee, writing that "the Mortgage clearly declares MERS the mortgagee. Plaintiffs granted the Property and power of sale to MERS and its successors and assigns. The Mortgage also grants MERS the right to foreclose. MERS in turn executed an unambiguous document assigning its rights under the Mortgage.  Thus, a record chain of title clearly exists, providing Chase the right to foreclose.'"