MI Suit Seeks Hundred$ Of Million$ From MERS Over Allegedly "Illegally Prosecuted" F'closures; Points To Recent State Appeals Court Ruling For Support

In Detroit, Michigan, Bloomberg reports:

• Mortgage Electronic Registration Systems Inc. "illegally prosecuted" non-judicial foreclosures in Michigan and owes more than $100 million to people who lost their homes, lawyers for three homeowners said in a lawsuit.
• The homeowners said Merscorp Inc.'s MERS, which runs an electronic registry of mortgages, used Michigan's so-called foreclosure by advertisement process illegally and "misappropriated" their homes. Any foreclosures by MERS using this process in Michigan should be voided, they said in their complaint filed in federal court in Detroit.
• Michigan is one of 27 states where banks don't have to get a court's permission to seize a property, meaning homeowners have to bring their own lawsuit to halt a foreclosure. Michigan law lets mortgage lenders or servicers foreclose after advertising a default in a newspaper for four consecutive weeks.
• MERS "lacked the authority to foreclose by advertisement" because it didn't own or have any interest in the underlying debt and "was not the servicing agent of the mortgage," Maryla Depauw and Sharon and Terrance Lafrance, the homeowners said, in their complaint filed yesterday. MERS "knowingly, fraudulently and illegally" foreclosed on homes for years using a law it "had no authority or right to utilize," they claim.
• MERS is required to take foreclosures to court, their lawyers said, citing an April 21 decision by Michigan's Court of Appeals.(1) The decision, which voided two property seizures, said state law requires a foreclosing party to own the legal title to the debt.

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• Depauw and the Lafrances filed their suit as a class action, seeking to represent all other Michigan property owners "whose property was illegally foreclosed upon by MERS." They're asking for more than $100 million in actual damages on multiple counts including fraud and wrongful foreclosure, as well as more than $300 million in punitive damages.

For the story, see Merscorp Mortgage Registry Sued Over Michigan Foreclosures.

For the lawsuit, see Depauw v. Mortgage Electronic Registration Systems Inc.

(1) For the Michigan appeals court 2-1 majority ruling, see Residential Funding Co, LLC v Saurman, ___ Mich App ___, ___ NW2d ___ (April 21, 2011) (for publication).

Go here for the dissenting opinion.