April 9, 2015 

by Jeffrey T. Goudie
Orlans Associates, PC – USFN Member (Michigan)

The case discussed here illustrates the importance of monitoring evolving foreclosure case law. In Trademark Properties of Michigan, L.L.C. v. Fannie Mae (Mich. App. No. 313296, Nov. 18, 2014), the Court of Appeals held that an affidavit based upon a reversed COA opinion could not expunge a sheriff’s deed or revive a foreclosed mortgage.

MERS foreclosed a condominium mortgage on May 11, 2010. Fannie Mae purchased the property at a sheriff’s sale on May 11, 2010 and recorded the sheriff’s deed ten days later. The property was never redeemed. The condominium association foreclosed on its lien for non-payment of assessments, and purchased the property at the sheriff’s sale on February 15, 2011, with a final redemption date of August 15, 2011. On August 9, 2011, the lender for MERS recorded an affidavit to expunge the sheriff’s sale to Fannie Mae. The affidavit averred that the sheriff’s deed was void ab initio, based on Residential Funding Co, LLC v. Saurman, 292 Mich. App. 321 (2011). [In Saurman, the COA had held that a mortgagee had no right to foreclose by advertisement under MCL 600.3204(1)(d) because it was not the noteholder with a property interest.] The condominium association then filed a quiet title action, arguing that the affidavit could not revive a foreclosed mortgage.

The Court of Appeals held that since the Michigan Supreme Court had reversed Saurman almost a year earlier, MERS’s contention that its mortgage interest still encumbered the property failed. The court also held that the Saurman reversal meant that the foreclosure had extinguished the MERS mortgage, and the association had the superior interest in the property.

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