Michigan Court of Appeals Rules JPMorgan Chase Loans Acquired From The FDIC Must Be Recorded.
Steve Dibert, MFI-Miami
Last week, the Michigan Court of Appeals handed down a second ruling about the chain of ownership of mortgages and notes. Ths ruling takes Davenport v. HSBC to the next level and calls for a strict interpretation of a Michigan law that states that if a foreclosing party is not the originating note holder they must be able to show a record chain of the note.
MCL 600.3204(3) states:
If the party foreclosing a mortgage by advertisement is not the original mortgagee, a record chain of title shall exist prior to the date of sale under section 3216 evidencing the assignment of the mortgage to the party foreclosing the mortgage.
Unlike Davenport v. HSBC that was handed down in 2007, in Kim v. J.P. Morgan Chase, Chase claims the requirements under MCL600.3204(3) don’t apply because JPMorgan Chase acquired the loan “by operation of law”. What this means is JPMorgan is claiming they don’t need to show a recorded chain of ownership because they acquired the note through their acquisition of Washington Mutual’s assets after Washington Mutual was placed into FDIC receivership in 2008. The Court of Appeals disagreed and said that a claim of “by operation of law” could only be claimed by the FDIC and that a mortgage assignment from the FDIC to JPMorgan Chase still had to be properly recorded with the Register of Deeds.