Editor: David Reiss
Brooklyn Law School

February 12, 2013

The Michigan District Court holds that MERS has Standing to Initiate a Foreclosure by Advertisement

By Robert Huberman

In Matthews v. Mortgage Elec. Registration Sys., 10-CV-13740, 2011 WL 2563180 (E.D. Mich. June 28, 2011), the Michigan District Court, affirmed the Magistrate Judge’s determination that MERS had standing to foreclose on the Matthews’ property.

Shelia and Eugene Matthews took out a mortgage in 2006. They defaulted on the loan leading to the initiation of foreclosure proceedings and a sheriff’s sale of their home in 2009. Nine months later, the Matthews’ filed this lawsuit against MERS and Fannie Mae. Magistrate Judge Randon issued a Report and Recommendation which granted Defendants’ motion to dismiss the Matthews’ complaint. The Matthews’ then filed a motion to vacate the Magistrate Judge’s report pursuant to Civil Rule 60(b) (Relief from a Judgment or Order).

The court held that the Matthews’ did not challenge any of the Magistrate Judge’s findings of fact or conclusions of law. In addition, when MERS responded saying that the Matthew’s motion was not a proper basis for objecting a Magistrate Judge’s report, the Matthews’ did not correct their pleadings. Furthermore, Rule 60(b) only allows relief from a final judgment, order, or proceeding—a Report and Recommendation is not binding or final. Thus the court did not reach the merits of the Matthews’ motion.

The court also adopted the Magistrate Judge’s Report and Recommendation holding that MERS had standing to initiate a foreclosure by advertisement against the Matthews’ property. The Matthews’ claimed that MERS failed to have a valid security interest in the property and, as a result, violated Michigan’s foreclosure by advertisement statute. The court noted, however, that the Matthews’ voluntarily entered into a mortgage agreement with MERS as nominee for lender Quicken Loans, Inc. The Matthews’ mortgage contained a power of sale which gave MERS the right to foreclose and sell their property. Thus, the court held that the ability to foreclose by advertisement extended beyond the owner of the indebtedness and, therefore, MERS was within their right to pursue foreclosure by advertisement.

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