In Trademark Properties v. Federal National Mortgage Association, No. 313296, the Court of Appeals evaluated the ability of a party to undo a foreclosure sale and revive a mortgage.  In 2003, Earl Strickfaden purchased a condo, with the mortgage first held by GMAC Mortgage Corporation (GMAC), and then by Mortgage Electronic Registration Systems, Inc. (MERS). Strickfaden defaulted; MERS foreclosed; Fannie Mae purchased the property at a sheriff’s sale. Then, Manor Homes of Troy Association (MHTA) filed a lien on the property for unpaid association dues. MHTA foreclosed; Trademark Properties (Trademark) purchased the property at a sheriff’s sale. 

During the redemption period following MHTA’s foreclosure, GMAC filed an affidavit to expunge the first sheriff’s sale to Fannie Mae. GMAC argued that the sale was void ab initio and that the MERS mortgage was revived. The trial court agreed, referring to Residential Funding Co. v. Saurman, 807 N.W.2d 412 (Mich. Ct. App. 2011). In Saurman, a party had attempted to foreclose on a property by advertisement, but the Michigan Court of Appeals held that the party could not foreclose because it was merely a mortgagee, and not a noteholder. As such, party had no “interest in the indebtedness secured by the mortgage” under the foreclosure by advertisement requirements in MCL 600.3204(1)(d). Such foreclosure proceedings in Saurman were, therefore, void ab initio.
 
At the time GMAC filed its affidavit, Saurman was still controlling authority, and because MERS was a also a mortgagee, the precedent would have applied.  The Michigan Supreme Court, however, reversed Saurman and held that a security lienholder has the requisite interest in the indebtedness on a property to foreclose by advertisement. Residential Funding Co. v. Saurman, 805 N.W.2d 183 (Mich. 2011).  Thus, the Court of Appeals held the position that the MERS mortgage was revived was no longer sustainable and concluded that even though affidavit had been filed while Saurman was still effective, the affidavit itself had no effect on the validity of the MERS foreclosure sale.