Dispute foreclosures within the redemption period

In an unpublished opinion dated October 9, 2012 in Tipton v Flagstar Bank, the Michigan Court of Appeals affirmed the Washtenaw Circuit Court’s grant of summary disposition in favor of Flagstar.

The Tiptons purchased the subject property in 2002. After failing to make loan payments, Flagstar foreclosed in 2010. The Tiptons did not redeem the property during the redemption period, nor did they seek to extend the redemption period. In March 2011, a district court issued an order of eviction. The following month, the Tiptons initiated this lawsuit.

The first claim the Tiptons made was the Flagstar did not send them a 14-day letter. The Court presumes that this letter refers to the notice required by the now-repealed MCL 600.3205a. The Court indicates that the Tiptons offered no rebuttal to Flagstar’s documentary evidence that the letter was served by first-class certified mail. The Court also points out that the statute does not create a cause of action to nullify a foreclosure sale after the redemption period expires. The statute would only allow a borrower who does not receive notice to enjoin the foreclosure, and the Tiptons did not attempt to do this.

The second claim was that Flagstar allegedly violated MCL 600.3205c so egregiously that the Tiptons are entitled to equitable extension of the redemption period. However, since the redemption period ended, the Tiptons cannot seek to extend it. The Tiptons submitted two letters from Flagstar dated after the foreclosure denying loan modifications as evidence that Flagstar was considering a loan modification and so dissuaded the Tiptons from taking action. The Court did not find the argument persuasive since the letters came after the foreclosure and did not prevent the Tiptons from pursuing redemption.

If you are involved in a foreclosure, make sure all promises from the mortgagee are in writing and that you take timely action to preserve your rights. Attorneys at the Gallagher Law Firm frequently represent parties in foreclosure disputes. Contact us today.