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REAL ESTATE 80: Only fraud or irregularity related to the foreclosure proceeding itself justifies setting aside a foreclosure sale.

Plaintiff purchased a home in Dearborn Heights, Michigan in 2007 with a mortgage. On February 19, 2019, the lender sent a letter to Plaintiff indicating receipt of her request for mortgage assistance (RMA) and submitted documents. Three days later, however, the lender informed Plaintiff by letter that it closed review because they no longer serviced the loan and that it would forward the submissions to the new loan servicer. During February 2019, PHH became Plaintiff’s mortgage loan servicer.

Mortgage Default

Months later because Plaintiff defaulted on the mortgage loan, PHH initiated a foreclosure by advertisement as permitted by the terms of the mortgage, and the Detroit Legal News published the notice of foreclosure by advertisement four consecutive weeks. On September 6, 2019, PHH’s foreclosure counsel posted a copy of the foreclosure notice in a conspicuous place on the subject premises. The published and posted foreclosure notice stated that the sheriff’s sale would occur on October 3, 2019, the mortgage loan amount due on the date of notice, and that the statutory redemption period would commence upon the sheriff’s sale of the subject property.

Sheriff’s Deed

On October 3, 2019, PHH purchased the subject property at the sheriff’s sale and recorded the Sheriff’s Deed on Mortgage Sale along with copies of the notices and affidavits of publication, posting, and purchase in the Wayne County Register of Deeds.

In late November 2019, PHH quitclaimed the subject property to third-party defendant, Federal Home Loan Mortgage Corporation (FHLM). In mid-December 2019, FHLM sold the property to defendant and conveyed title to her via a covenant deed. She recorded her covenant deed in the Wayne County Register of Deeds on January 8, 2020.

Quiet Title

On March 11, 2020, plaintiffs filed a complaint against defendant to quiet title to the subject property and alleged that defendant breached the statutory notice requirements, breached the RMA by foreclosing when they sought a financial accommodation, and that they were entitled to an injunction to stay and toll the expiration of the redemption period.

Plaintiffs asserted that the sheriff’s sale had been improper due to fraud because defendant’s predecessors failed to notify them of the foreclosure which they contended required setting aside the sheriff’s sale and starting the foreclosure process from the beginning. Plaintiffs stated that they might have been able to procure money to reinstate the loan and keep the property. Plaintiffs also asserted that defendant’s predecessors failed to adequately respond to plaintiffs’ RMA while pursuing foreclosure.

Trial Court

The trial court dispensed with oral argument and entered an opinion and order on September 22, 2020, denying plaintiffs’ motion for summary disposition. The trial court ruled that defendant obtained a valid title to the property. After a valid sheriff’s sale and expiration of the redemption period, the deed becomes a valid deed vested in the purchaser. The trial court stated that plaintiffs failed to convince the Court that defendant can in any way be held responsible for any claims of wrongdoing prior to the sheriff’s sale. Only fraud or irregularity related to the foreclosure proceeding itself justifies setting aside a foreclosure sale.

Real Estate Litigation

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