Breadiy v. PNC Mortgage

Summarized by Thomas DeCarlo , John Steinberger & Associates, PC
10 years 7 months ago

Citation:

Case No. 14-2347 (6th Cir. 2015)

Tag(s):

Ruling:

Michigan State Foreclosure Statute does not require lender to use judicial foreclosure process where borrower defaulted on a prior loan modification within one year of its execution.

Procedural context:

Lender commenced foreclosure-by-advertisement proceedings and borrower filed suit to enjoin non-judicial foreclosure process. After lender removed action to Federal Court, District Court granted Summary Judgment for lender, holding that State law did not require use of judicial foreclosure process. On appeal, the Sixth Circuit affirmed the Summary Judgment in favor of lender.

Facts:

Borrower and lender entered into loan agreement to allow borrower to purchase home. Borrower repeatedly fell behind in the payments and the parties repeatedly modified the loan. The latest modification was executed in March, 2011, and borrower defaulted in September, 2011. In February, 2012, lender conditionally approved another modification but borrower failed to make even the first payment under the trial loan modification. Lender resumed non-judicial foreclosure proceedings and borrower filed suit, claiming that Michigan Compiled Laws Section 600.3205c precluded non-judicial foreclosure and mandated foreclosure by judicial process. Sixth Circuit held that Section 600.3205, by its terms, does not apply where the borrower failed to comply with the terms of a prior loan modification for one year after the date of the modification. There was no dispute that borrower defaulted on loan modification entered into in March, 2011 by September, 2011, a period of 6 months. Because borrower did not comply with the terms of the modified mortgage loan for at least one year, Section 600.3205 no longer applied and lender was free to use non-judicial foreclosure process. Court considered sua sponte sanctions against borrower's counsel for pursuing a frivolous appeal but concluded that lender had not requested sanctions and court would consider opinion a "warning" to counsel that sanctions may be imposed if counsel pursues same appeal in later case.

Judge(s):

Boggs, Batchelder and Huck (District Judge)

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