In this foreclosure-related litigation, plaintiff, Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC), appeals by leave granted an Ingham Circuit Court opinion and order reversing the 55th District Court’s July 31, 2012 order terminating defendants’ possession of residential property located in East Lansing. For the reasons set forth in this opinion, we affirm that portion of the circuit court’s order holding that the foreclosing party, CitiMortgage (CMI), was subject to the recordation requirements under MCL 600.3204(3). However, we reverse in all other respects and remand for reinstatement of the district court’s order.
Underlying Mortgage Transaction
This dispute involves real property located at 2458 Barnsbury Road, in East Lansing, Michigan (the property). On March 21, 2003, First National Bank of America (First National) loaned defendants $240,000 for the purchase of the property. Defendants executed a mortgage encumbering the property to First National. The mortgage was recorded on April 24, 2003. On March 26, 2003, First National assigned the mortgage to ABN-AMRO Mortgage Group, Inc. (ABN-AMRO). The assignment was recorded on November 25, 2003. On September 1, 2007, CitiMortgage, Inc. and ABN-AMRO merged and maintained the name CitiMortgage (hereinafter CMI).
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Freddie Mac and the Federal Housing Finance Agency Conservatorship
Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) is a federally chartered corporation that was created as part of the Emergency Home Finance Act of 1970. See PL 91-351, §§ 301-302; 84 Stat 451; 12 USC 1451 et seq.; American Bankers Mortg Corp v Fed Home Loan Mortg Corp, 75 F 3d 1401, 1404 (CA 9, 1996). Freddie Mac operates in the secondary mortgage market, purchasing and securitizing residential mortgages. Cty of Sonoma v Fed Housing Finance Agency, 710 F 3d 987, 989 (CA 9, 2013). Freddie Mac is governed by the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (Safety and Soundness Act), 12 USC 4501 et seq. Id.
In 2008, Congress amended the Safety and Soundness Act by enacting the Housing and Economic Recovery Act of 2008 (HERA). PL 110-289; 122 Stat 2645; as codified at 12 USC 4511 et seq. “HERA established the Federal Housing Finance Agency [FHFA], an independent agency charged with supervising [Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC)] and the Federal Home Loan Banks.” Cty of Sonoma, 710 F 3d at 989. HERA empowered the FHFA to act, under certain circumstances, as a conservator or receiver of Freddie Mac or the Federal National Mortgage Association (Fannie Mae) for purposes of “reorganizing, rehabilitating, or winding up the affairs” of either entity. 12 USC 4617(a)(1) (2). It is undisputed that the FHFA placed Freddie Mac into conservatorship in September, 2008.
Foreclosure of the Property
In June 2011, defendants defaulted on the mortgage and CMI foreclosed on the property under Michigan’s foreclosure by advertisement statute, MCL 600.3201, et seq. Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) purchased the property at an October 20, 2011 sheriff’s sale. Defendants failed to redeem the property within the six-month statutory redemption period and the property vested in Freddie Mac on April 20, 2012. See MCL 600.3236.
On May 1, 2012, after expiration of the statutory redemption period, Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) initiated eviction proceedings in district court pursuant to MCL 600.5704. Defendants challenged the foreclosure, arguing in part that the foreclosure violated their Fifth Amendment due process rights. Defendants maintained that Freddie Mac was a federal actor by virtue of FHFA’s conservatorship, and was subject to the due process requirements of the Fifth Amendment and therefore could not foreclose by advertisement. Defendants also argued that CMI’s foreclosure was statutorily invalid under the recording act because there was no chain of title evidencing the transfer of the mortgage from ABN-AMRO to CMI. Therefore, according to defendants, CMI did not own the debt and the foreclosure notice failed to properly identify the foreclosing entity.
The district court granted Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC)’s motion for summary disposition under MCR 2.116(C)(9) (failure to state valid defense) and MCR 2.116(C)(10) (no genuine issue of material fact). The district court held in relevant part that Freddie Mac was not a governmental actor subject to Fifth Amendment claims and that the chain of title was proper under MCL 600.3204(3) because the merger between ABN-AMRO and CMI did not constitute an “assignment” of the mortgage that necessitated a recording.