Editor: David Reiss
Brooklyn Law School

February 13, 2013

Michigan District Court holds that a Mortgage is Valid and Enforceable even if it is separated from the Promissory Note

By Robert Huberman

In Marrocco v. Chase Bank, N.A., 12-10605, 2012 WL 3061031 (E.D. Mich. July 26, 2012), the Michigan District Court granted Chase Bank’s and MERS’s motion to dismiss.

Marrocco obtained a loan of $181,000 from GreenPoint Mortgage Funding, Inc. As security for the loan, Marrocco executed a mortgage where MERS was the mortgagee, as nominee for the lender, and the lender’s successors. Marrocco defaulted on his loan and, in August 2009, filed for bankruptcy. Marrocco was granted a discharge, however, and continued to live on the property. Marrocco then brought this action alleging that JP Morgan Chase and Wells Fargo threatened to foreclose on the property, even though, he believed, the debt was discharged. Marrocco claimed that Defendants violated the Real Estate Settlement Procedures Act (RESPA) and sought to quiet title to the property extinguishing any interest claimed by the defendants. In response, Chase and MERS filed motions to dismiss.

In order for Marrocco to bring a claim under RESPA, he must allege actual damages resulting from the RESPA violation. Here, Marrocco claimed that he sent Chase a Qualified Written Request (QWR) under RESPA, and Chase failed to adequately respond. The court held, however, that Marrocco’s complaint contained no allegations indicating a connection between the response to his QWR and the subsequent threats of foreclosure. Instead, foreclosure was threatened because Marrocco failed to make the scheduled loan payments. Accordingly, the court dismissed Marrocco’s RESPA claim.

Next Marrocco wanted the court to extinguish any interest in property claimed by defendants. The court noted that in order to seek quiet title, a plaintiff must prove that his claim to the property is superior to any other person’s claim. As a result, Marrocco claimed that the mortgage was null and void. Specifically Marrocco supported his claim based on GreenPoint’s transfer of the note without the mortgage. The court noted, however, that a mortgage is enforceable under Michigan law even if it has been separated from the promissory note. Thus, the court held that the validity of the mortgage was unaffected by the separation of the note and mortgage. In response, Marrocco contested the transfer of his loan into a trust pursuant to a Pooling and Servicing Agreement, but the court stated that a litigant who is not a party to an assignment lacks standing to challenge that assignment.

Thus, the court concluded that Marrocco’s claim under RESPA and his quiet title claim must be dismissed because he failed to allege facts that would provide sufficient grounds for invalidating the mortgage.

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