The Michigan Supreme Court upheld a Michigan Court of Appeals ruling from January that 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 mortgage.
MCL 600.3204(3) states:
In Kim v. J.P. Morgan Chase, Chase claimed the requirements under MCL600.3204(3) do not apply
because JPMorgan Chase acquired the loan “by operation of law”. What this means is JPMorgan
chase is claiming is 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.
The Michigan Supreme Court in their 4-3 ruling states that the mortgages are currently
unenforceable because JPMorgan Chase can not claim operation of law. The court ruled JPM
Chase did not acquire Washington Mutual as a corporate entity. Instead they acquired assets of
the company through a third party. Therefore a chain of ownership must be recorded with the
Register of Deeds where the property is located. However, the courts ruling did leave open the
possibility that JPMorgan Chase could go back and record a mortgage
assignment. However, JPMorgan Chase faces two major obstacles in doing so. The first being if
when the FDIC has concluded the liquidation of Washington Mutual and damages owed to
homeowners they may have already illegally evicted from their homes.
This ruling could affect as many as many as 40,000 Washington Mutual mortgages in Michigan that
JPMorgan Chase acquired from the FDIC. It is unknown if JPMorgan Chase will seek damages
from the law firms aka foreclosure mills that were either hired directly or indirectly by JPMorgan
Chase to handle recording these documents and execute the foreclosures.