Vincent Howard and our Claremont foreclosure defense attorneys were interested to see a recent case in which the Sixth Circuit found no fraud adequate to set aside a foreclosure sale. Conlin v. MERS et al. concerns the foreclosure of Michael Conlin's former Ann Arbor, Mich. home. Conlin alleged that the foreclosure was invalid because U.S. Bank, the assignee of the mortgage, received an assignment that was "robo-signed" and thus forged, and also that MERS was not permitted to make the assignment. The district court in Michigan disagreed, dismissing Conlin's suit seeking damages and an order setting aside the foreclosure sale. The Sixth U.S. Circuit Court of Appeals agreed, finding that Conlin didn't make the showing of fraud that Michigan requires to set aside a foreclosure sale after the six-month period for redemption has expired.
Conlin refinanced in 2005, taking out a $240,000 loan from Bergin Financial Inc. Bergin sold the loan to the Real Estate Mortgage Investment Conduit, an entity for which U.S. Bank was the trustee. The mortgage was held by MERS as Bergin's nominee, but assigned from MERS in 2008 to "U.S. Bank national association as trustee." and serviced by GMAC Inc. In 2010, law firm Orlans Associates sent Conlin a letter notifying him that he was in default, on behalf of GMAC. The subsequent notice of foreclosure sale said the mortgage was held by U.S. Bank as trustee by assignment. The property was sold at a sheriff's sale on March 31, 2011. On October 28, 2011, Conlin sued to have the sheriff's sale set aside, alleging that U.S. Bank never had the legal right to foreclose because the assignment was forged, or robo-signed, and because MERS had no capacity to assign the mortgage. The district court dismissed his case.
The Sixth Circuit affirmed that ruling, in an opinion that relied heavily on Michigan's foreclosure laws. State law gives the homeowner six months after a sheriff's sale to redeem the property. After that period, the homeowner's rights to and interest in the property disappear. Without a showing of fraud, the Sixth said, borrowers like Conlin may not have the foreclosure sale set aside. The court then found Conlin's fraud arguments insufficient to meet that standard. A 2012 Michigan Supreme Court case, Kim v. JP Morgan Chase, held that failure to comply with Michigan foreclosure law makes a foreclosure voidable but not void ab initio. That court went on to prove a foreclosure defect claim, plaintiffs must show they were prejudiced by the defect--that is, they must show they were left in a worse position to preserve their interests. Applying those principles to Conlin's case, the Sixth found no prejudice--Conlin didn't show that he'd be subject to more liability or could have kept the property absent the robo-signing. Thus, the court upheld dismissal of the claim.
Vincent Howard and our Westminster foreclosure defense lawyers would like to call attention to the six-month redemption period Michigan provides to homeowners. Though we have nothing similar in California, we have plenty of legal deadlines in state and federal law, and missing them can make your case more difficult to win, just like this one. If Conlin had brought his case a month earlier, he would not have been required to show fraud clearly, and the court may have looked more kindly on the allegations he actually did make. In many other cases involving legal deadlines, the court will not consider the case at all if it's filed outside the deadline--no matter how much merit it might have. That's why the Riverside foreclosure defense attorneys at Howard Law, P.C., prefer to talk to clients as soon as they think they might want to pursue a case.
If you believe you were deceived when you took out your loan, don't wait to call Vincent Howard and the team at Howard Law to talk about a predatory lending lawsuit. To learn more, call us toll-free at 1-800-872-5925 or send us a message online.