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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

MAHMOUD ELZEIN,

Plaintiff,

v. Case No. 15-11457

HON. AVERN COHN 

FEDERAL NATIONAL 

MORTGAGE ASSOCIATION, 

Defendant.

______________________________________/

MEMORANDUM AND ORDER

GRANTING DEFENDANT’S MOTION TO DISMISS (Doc. 7)

I. INTRODUCTION

This is a wrongful foreclosure and consumer protection case under the Fair Debt 

Collection Practices Act (“FDCPA”), 12 U.S.C. § 1692 et seq. Plaintiff Mahmoud Elzein 

is suing Defendant Federal National Mortgage Association (“FNMA”) relating to the 

foreclosure by advertisement of real estate owned by Elzein located in Dearborn 

Heights, Michigan. Plaintiff’s First Amended Complaint (Doc. 4) is three counts:

Count I: Wrongful Foreclosure

Count II: Quiet Title

Count III Violation of the FDCPA

Now before the Court is FNMA’s Motion to Dismiss (Doc. 7). For the reasons 

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that follow, FNMA’s motion will be granted.1

II. BACKGROUND

A. Factual Basis

This matter involves real property located in Dearborn Heights, Michigan. On or 

about June 9, 2006, Elzein entered into a loan transaction reflecting a note2 payable to 

Shore Mortgage as lender (See Note, Doc. 7 Ex. 1), and a mortgage securing the note

to Mortgage Electronic Registration Systems (MERS) as mortgagee (See Mortgage, 

Doc. 7 Ex. 2) in the amount of $314,400.00.

On September 10, 2011, the mortgage was assigned by MERS to Bank of 

America. (See Assignment of Mortgage, Doc. 7 Ex. 3). 

Eventually, Elzein defaulted on his obligations under the note. On July 11, 2014, 

Elzein was sent a letter by Trott & Trott, a debt collection agency, stating that Nationstar 

Mortgage (“Nationstar”), its client, has initiated the foreclosure process. The letter 

further stated that FNMA is the owner of the debt, and that Nationstar is the servicer of 

the debt. The letter allowed Elzein thirty days to dispute the validity of his outstanding 

debt. (See Trott & Trott Letter, Doc. 5. Ex. 6) 

On July 31, 2014, the mortgage was formally assigned to Nationstar. (See 

Assignment of Mortgage, Doc. 7 Ex. 4). 

 1 The Court originally scheduled this matter for hearing. Upon review of the 

parties’ papers, however, the Court finds that oral argument is not necessary. See E.D. 

Mich. LR 7.1(f)(2).

2 Although the record is unclear, the note was ultimately transferred to FNMA, who 

is identified as the owner of the indebtedness at the time of the foreclosure. (See Trott 

& Trott Letter, Doc. 5. Ex. 6) Elzein, in his response to FNMA’s motion to dismiss, does 

not contest that FNMA was the note holder and the owner of the indebtedness at the 

time of the foreclosure. 

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On August 21, 2014, Nationstar, acting though Trott & Trott, initiated a 

foreclosure by advertisement, which was published in the Detroit Legal News on August 

21, August 28, September 4, and September 11, 2014 (See Affidavit of Publication, 

Doc. 7 Ex. 5 at 3), and was posted on the subject property on August 25, 2014. (See 

Evidence of Sale, Doc. 7 Ex. 5 at 4) These notices contained the following statement: 

“ATTN PURCHASERS: This sale may be rescinded by the foreclosing mortgagee. In 

that event, your damages, if any, shall be limited solely to the return of the bid amount 

tendered at sale, plus interest.” (Id.)

A Sheriff’s Sale was scheduled for September 18, 2014. (See Sheriff’s Deed, 

Doc. 7 Ex. 5 at 1) That day, a sheriffs deed was issued to FNMA as the successful 

bidder. (See id.; Affidavit of Purchaser, Doc. 7 Ex. 5 at 6) FNMA purchased the 

property in a “full credit bid” for the full amount of indebtedness. FNMA stated in the 

Affidavit of Purchase that the redemption value was $457,763.93 and that the 

redemption period expired on March 18, 2015.

Elzein did not redeem or obtain a court order extending the redemption period. 

Instead, Elzein filed suit in Wayne County Circuit Court on March 17, 2015. After the 

case was removed to this Court, Elzein filed a First Amended Complaint on May 20, 

2015. 

B. Elzein’s Claims

First, under his wrongful foreclosure claim, he says that FNMA bid on the 

property at the Sheriff’s Sale, even though it did not have proper title. He also says that 

the Sheriff’s Sale to FNMA is void because of irregularities and/or fraud. He says that 

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the language quoted above, stating that the sale may be rescinded by the mortgagee, 

was not authorized by the Michigan statute governing the contents of mortgage 

foreclosure notices. He says that FNMA was neither the “mortgagee, his assigns or 

legal representatives” and was therefore not authorized to buy the property through a

full credit bid. He says that FNMA was not a proper foreclosing party as required by 

Michigan law. Finally, he says that FNMA and Charter One (an unnamed party in this 

action) created “unnecessary delays” which prevented him from redeeming the 

property. 

Second, Elzein’s quiet title action says that the sale to FNMA was invalid for the 

failures stated above, and that he is therefore the rightful owner of the property.

Third, Elzein says that FNMA, a “debt collector” under the FDCPA, violated the 

statute by proceeding with the foreclosure, even though it was not authorized as a 

foreclosing party.

III. STANDARD OF REVIEW

A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests 

the sufficiency of a complaint. To survive a Rule 12(b)(6) motion to dismiss, the 

complaint’s “factual allegations must be enough to raise a right to relief above the 

speculative level on the assumption that all of the allegations in the complaint are true.” 

Bell Atlantic Corp. v. Twombley, 550 U.S.544, 545 (2007). See also Ass’n of Cleveland 

Fire Fighters v. City of Cleveland, Ohio, 502 F.3d 545, 548 (6th Cir.2007). The court is 

“not bound to accept as true a legal conclusion couched as a factual allegation.” 

Aschcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks and citation 

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omitted). Moreover, “[o]nly a complaint that states a plausible claim for relief survives a 

motion to dismiss.” Id. at 679. In sum, “[t]o survive a motion to dismiss, a complaint 

must contain sufficient factual matter, accepted as true, to state a claim for relief that is 

plausible on its face.” Id. at 678 (internal quotation marks and citation omitted).

IV. DISCUSSION

A. Wrongful Foreclosure Claim

For several reasons, FNMA says that Elzein fails to state a claim for wrongful 

foreclosure. Each is addressed below. 

1.

Elzein says that FNMA was not a proper foreclosing party as required by 

Michigan law. Elzein further says that FNMA’s bid was invalid because there was no 

proper chain of title. These arguments lack merit.

First, FNMA clarifies that, contrary to Elzein’s allegations, it was not FNMA that 

foreclosed upon the property, but Nationstar. At the time of the foreclosure, Nationstar 

was the servicer of the debt as well as the assignee of the mortgage, which passed 

from Bank of America on July 31, 2014. Indeed, the published and posted notices 

expressly stated that Nationstar was rightful assignee of the mortgage. (See Affidavit of 

Publication, Doc. 7 Ex. 5 at 3; Evidence of Sale, Doc. 7 Ex. 5 at 4) The record shows 

that Nationstar, rather than FNMA was the foreclosing party. 

FNMA, by contrast, was the holder of the indebtedness and the successful bidder 

at the Sheriff’s Sale. Further, FNMA did not take title to the property until the Sheriff’s 

Sale on September 18, 2014—well after Nationstar initiated foreclosure proceedings. 

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Under Michigan law, proper foreclosing parties include (1) “the owner of the 

indebtedness,” (2) the owner “of an interest in the indebtedness secured by the 

mortgage,” or (3) “the servicing agent of the mortgage.” M.C.L. § 600.3204(1)(d). In 

addition, “[i]f the party foreclosing a mortgage by advertisement is not the original 

mortgagee, a record chain of title must exist before the date of sale.” Id. § (3). Here the 

proper foreclosing party was not FNMA, but Nationstar, who was assignee and 

servicing agent of the mortgage, and who is in the chain of title as transferee from Bank 

of America, as transferee from MERS.

2.

Elzein also says that FNMA was not entitled to purchase the property through a 

full credit bid. This argument is without merit. He cites M.C.L. § 600.3228 for the 

proposition that only the mortgagee, his assigns, or legal representatives can purchase 

the property by a full credit bid. This, however, misstates the language of the section, 

which provides, “The mortgagee, his assigns, or his or their legal representatives, may, 

fairly and in good faith, purchase the premises so advertised, or any part thereof, at 

such sale.” M.C.L. § 600.3228. There is no language in the statute which prevents the 

owner of the indebtedness from making a purchase through a full credit bid. To the 

contrary, Michigan courts have explained:

When a lender bids at a foreclosure sale, it is not required to pay cash, but 

rather is permitted to make a credit bid because any cash tendered would 

be returned to it. If this credit bid is equal to the unpaid principal and 

interest on the mortgage plus the costs of foreclosure, this is known as a 

“full credit bid.” When a mortgagee makes a full credit bid, the mortgage 

debt is satisfied, and the mortgage is extinguished. 

New Freedom Mtg. Corp. v. Globe Mtg. Corp., 281 Mich. App. 63, 68 (2008) (citations 

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omitted). Other courts have recognized FNMA’s right to purchases a foreclosed-upon 

property in a full credit sale. In Rubin v. Fannie Mae, No. 12-CV-12832, 2012 WL 

6000572 (E.D. Mich. Nov. 30, 2012), the court said the following regarding FNMA, the 

lender in the case: “

[FNMA or the loan servicer] may bid the full amount due at the Sheriff’s 

Sale which is applied as a credit against the amount owed. [The servicer]

cannot then go after [the mortgagor] for any of the remaining collateral 

due. This actually helps [the mortgagor] who is no longer liable for the 

debt. This is the law in Michigan and many other jurisdictions. 

Id. at *2. FNMA therefore was entitled to purchase the property in a full credit bid at the 

Sheriff’s Sale. 

3.

Next, Elzein says there was a “procedural irregularity” not permitted by Michigan 

law. Specifically, he says that that the language quoted above, stating that the sale 

may be rescinded by the mortgagee, was not authorized by the applicable statute, 

M.C.L. § 600.3212. This argument is without merit. Section 600.3212, rather than 

prohibiting any language in particular, states the minimum requirements for a notice of 

foreclosure by advertisement. There is no basis for Elzein’s argument under the plain 

language of the statute he cites, nor does he cite any case law in support. 

Elzein also says that FNMA and Charter One (an unnamed party in this action) 

created “unnecessary delays” that prevented him from redeeming the property. There 

is no substance to this argument, however, put forth in the amended complaint or 

otherwise.

Neither does Elzein assert fraud beyond mere allegations, and states no details 

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as to how and when FNMA allegedly perpetrated a fraudulent act related to the 

foreclosure process or otherwise. “A plaintiff alleging fraud must meet Fed. R. Civ. P 

9(b)’s heightened pleading standard by ‘stat[ing] with particularity the circumstances 

constituting fraud or mistake.’ ” Woodland Harvesting, Inc. v. Georgia Pac. Corp., 693 

F. Supp. 2d 732, 739 (E.D. Mich. 2010) (quoting Fed. R. Civ. P 9(b)). Here, Elzein fails 

to do so. 

4.

Elzein is further unable to assert any prejudice resulting from the deficiencies he 

alleges. “For the alleged foreclosure defects to be actionable to set aside the 

foreclosure sale, [the mortgagor] must allege prejudice resulting from the defects. 

Washington v. BAC Home Loans Servicing, L.P., No. CIV. 12-12940, 2013 WL 

5476023, at *5 (E.D. Mich. Oct. 2, 2013) (citing Conlin v. Mortgage Elec. Registration 

Sys., Inc., 714 F.3d 355, 361 (6th Cir. 2013)). Here, Elzein has not shown prejudice 

beyond threadbare allegations and mere speculation.

5.

Finally, even if Elzein can assert a cognizable error in the foreclosure process, he 

lacks standing to assert it. 

After a Sheriff’s Sale and the statutory period of time within which to redeem the 

property expires, the mortgagor no longer has any right, title, or interest in the property. 

See M.C.L. § 600.3236. The Sixth Circuit has explained this aspect of Michigan law:

Under Michigan law, once the statutory redemption period expired, “all of 

plaintiff’s rights in and title to the property were extinguished.” Bryan v. 

JPMorgan Chase Bank, 304 Mich. App. 708, 848 N.W.2d 482, 485 (2014) 

(citation omitted). Therefore, once the redemption period lapses, a former 

property owner may not assert any claims with respect to the property. 

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See id. The filing of a lawsuit—even one filed before the expiration of the 

redemption period—will not toll the redemption period. Id. Indeed, 

“Michigan courts have held that once the statutory redemption period 

lapses, they can only entertain the setting aside of a foreclosure sale 

where the mortgagor has made ‘a clear showing of fraud, or irregularity.’ ” 

Conlin v. Mortg. Elec. Registration Sys., Inc., 714 F.3d 355, 359 (6th 

Cir.2013) (quoting Schulthies v. Barron, 16 Mich. App. 246, 167 N.W.2d 

784, 785 (1969)). Moreover, “not just any type of fraud will suffice. Rather, 

the misconduct must relate to the foreclosure proceeding itself.” Id. at 360 

(citation, quotation marks, and alterations omitted). In short, a plaintiff 

challenging a foreclosure action under Michigan law must meet a “high 

standard in order to have a foreclosure sale set aside after the lapse of the 

statutory redemption period.” Id. (quotation marks omitted).

Rubin v. Fannie Mae, 587 F. App’x 273, 275-76 (6th Cir. 2014). 

Therefore, because the statutory redemption period is over, Elzein’s rights \the 

property is extinguished. 

6.

For the above reasons, Elzein’s wrongful foreclosure claim is DISMISSED. 

B. Quiet Title Claim

Elzein also seeks relief under M.C.L. § 600.2932, which provides that 

Any person, whether he is in possession of the land in question or not, 

who claims any right in, title to, equitable title to, interest in, or right to 

possession of land, may bring an action in the circuit courts against any 

other person who claims or might claim any interest inconsistent with the 

interest claimed by the plaintiff, whether the defendant is in possession of 

the land or not.

Actions to quiet title are equitable in nature. Michigan Nat. Bank & Trust Co. v. Morren, 

194 Mich. App. 407, 410 (1992). FNMA argues that because Elzein defaulted on his 

mortgage, he is barred from seeking equitable relief of quiet title under the doctrine of 

unclean hands.

Michigan law states that “a person seeking equity should be barred from 

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receiving equitable relief if there is any indication of overreaching or unfairness on this 

person’s part.” Royce v. Duthler, 209 Mich. App. 682, 688-89 (1995). Under the 

unclean-hands doctrine, the Sixth Circuit has held that a mortgagor who defaults on a 

loan cannot “[seek] judicial assistance in avoiding his contractual obligations.” Yuille v. 

Am. Home Mortgage Servs., Inc., 483 F. App’x 132, 135 (6th Cir. 2012). 

In defense, Elzein states that “nowhere in the [complaint] is there an admission 

by [Elzein] that he defaulted on his mortgage loan.” There is no question, however, that 

he defaulted on the loan; indeed this is the very circumstance that initiated the 

foreclosure proceedings. Further, in defense he states that the unclean hands doctrine 

is an insufficient basis for dismissal of a claim on the pleadings. This assertion is 

unsupported and contradicted by Michigan law. See, e.g., McFerren v. B & B Inv. Grp., 

253 Mich. App. 517, 518 (2002) (affirming a lower court judgment dismissing a quiet title 

action based on the unclean-hands doctrine). 

Elzein’s quiet title claim is therefore DISMISSED.

C. FDCPA Claim

Under the FDCPA, Elzein claims that FNMA is a “debt collector” who violated the 

Act by “proceeding with the foreclosure . . . even though [FNMA] did not hold any 

interest in the mortgage and was not authorized to be a foreclosing party . . .”

This claim fails for two reasons. First, FDCPA defines “debt collector” as a 

person who conducts “any business[,] the principal purpose of which is the collection of 

any debts, or who regularly collects or attempts to collect, directly or indirectly, debts 

owed or due or asserted to be owed or due another.” 15 U.S.C. § 1692a(6). Here, there 

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is no indication that FNMA ever attempted to collect the debt; at most, it was Trott & 

Trott—a self-proclaimed “debt collector attempting to collect a debt”—who attempted to 

collect on the loan. 

Moreover, the very substance of Elzein’s FDCPA claim fails. As discussed 

above, FNMA was not the foreclosing party. Therefore, Elzein’s claim that FNMA 

improperly foreclosed on the property is without merit. 

Thus, Elzein’s FDCPA claim is DISMISSED.

V. CONCLUSION

For the above reasons, FNMA’s motion to dismiss is GRANTED. This case is 

DISMISSED.

SO ORDERED.

s/Avern Cohn

Avern Cohn

United States District Judge

Dated: August 3, 2015

I hereby certify that a copy of the foregoing document was served upon counsel of 

record on August 3, 2015, by electronic and/or ordinary mail.

s/Julie Owens

Case Manager

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