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Plaintiff Lacks Standing to Challenge Foreclosure Proceedings after Redemption Period Expired

The Michigan Court of Appeals recently affirmed a decision by the Oakland County Circuit Court that a Plaintiff who defaulted on her mortgage, did not have standing to challenge the foreclosure proceedings after the redemption period expired. The Plaintiff in Sagmani v. Lending Associates LLC, unpublished opinion per curiam of the Oakland Circuit Court, issued Aug. 7, 2012 (Docket No. 2010-111201-CH), filed an action after her home was foreclosed upon by advertisement and sold at a sheriff’s sale in December 2009. She asserted that the Defendants, Lending Associates, LLC and Flagstar Bank FSB made fraudulent misrepresentations to her; that all defendants violated the Mortgage Brokers, Lenders and Servicer Licensing Act; and, that defendants failed to comply with statutory foreclosure requirements.

The trial court dismissed her claims on summary disposition finding that because her interest in the property was extinguished when the foreclosure redemption period expired shortly after she filed her complaint, plaintiff lost standing to pursue her complaint. The Court of Appeals affirmed the decision, reiterating that a mortgagor loses all interest in property when the redemption period ends and a party can challenge the foreclosure after the redemption period only if there is clear evidence of fraud or irregularity in the foreclosure proceedings. The Plaintiff’s allegations that Defendants violated the “right to modification” stay of MCL 600.3204(4)(a), were in error where the foreclosure proceedings started before the statute’s effective date. Moreover, Plaintiff’s allegations that the Defendant Flagstar misrepresented that her loan modification was approved and foreclosure proceedings would stop were also dismissed. Plaintiff offered no evidence of a modification in writing; the court summarily disposed this claim as well. Therefore, Plaintiff’s failure to allege any legally actionable fraud or irregularity in the foreclosure proceedings resulted in her lack of standing to challenge the foreclosure after the redemption period expired.

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