NOT RECOMMENDED FOR PUBLICATION

File Name: 14a0749n.06

No. 13-1249

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

FEDERAL HOME LOAN MORTGAGE 

CORPORATION, 

Plaintiff/Counter-Defendant/Appellee, 

and 

FEDERAL HOUSING FINANCE AGENCY, 

Intervenor-Appellee,

v.

ENYKA M. GAINES and RICO R. GAINES,

Defendants/Counter-Plaintiffs/Appellants.

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ON APPEAL FROM THE 

UNITED STATES DISTRICT 

COURT FOR THE EASTERN 

DISTRICT OF MICHIGAN

BEFORE: McKEAGUE and GRIFFIN, Circuit Judges; and POLSTER, District Judge.*

GRIFFIN, Circuit Judge.

Plaintiffs Enyka and Rico Gaines,1brought this action challenging the foreclosure and 

sale of their property by defendant Federal Home Loan Mortgage Corporation (“Freddie Mac”). 

The district court dismissed their complaint. We affirm. 

 

*

The Honorable Dan A. Polster, United States District Judge for the Northern District of 

Ohio, sitting by designation. 

1Although the Gaineses were defendants in the original eviction action, they bring this 

appeal challenging the district court’s dismissal of the claims they brought in their counter-
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I.

The district court cogently summarized the facts of this case: 

[Plaintiffs] obtained a mortgage loan from the First Magnus Financial Corporation 

. . . . As a security for the loan, they authorized the placement of a mortgage on a 

parcel of realty, commonly known as 43637 Arborview Lane in Belleville, 

Michigan. This security was subsequently assigned to the Wells Fargo Bank 

(“Wells Fargo”). At some point thereafter, [plaintiffs] defaulted on their loan. 

On December 22, 2009, [plaintiffs] and Wells Fargo entered into a loan 

modification trial period plan [(“TPP”)] under the “Home Affordable 

Modification Program.” This loan modification [TPP] required [plaintiffs] to 

make three separate payments of $926.32 on or before January 1, 2010, 

February 1, 2010, and March 1, 2010, respectively. [The TPP also stated:] 

I understand that the [Trial Period Plan] is not a modification of the 

Loan Documents and that the Loan Documents will not be 

modified unless and until (i) I meet all of the conditions required 

for modification, (ii) I receive a fully executed copy of a 

Modification Agreement, and (iii) the Modification Effective Date 

has passed. I further understand and agree that the Lender will not 

be obligated or bound to make any modification of the Loan 

Documents if I fail to meet any one of the requirements under this 

plan. 

Thereafter, Wells Fargo commenced a foreclosure action by advertisement against 

[plaintiffs] whom they claimed had failed to satisfy their requisite financial 

obligations. 

Following the expiration of the six-month statutory redemption period,2Freddie Mac filed an 

eviction action in state court, to which plaintiffs filed a counter-complaint. Freddie Mac 

removed plaintiffs’ counterclaim to the district court, which then granted Freddie Mac’s motion 

for judgment on the pleadings pursuant to Rule 12(c) of the Federal Rules of Civil Procedure. 

Plaintiffs appealed. 

 

complaint to the eviction action. We therefore refer to them as plaintiffs for purposes of this

opinion. 

2

Following a foreclosure sale, Michigan law provides a period of time for the foreclosedupon mortgagor to purchase back, or “redeem” the property. See Mich. Comp. Laws §§ 

600.3240(7)–(12). 
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II.

The district court’s decision on a motion under Rule 12(c) is analyzed using the same de 

novo standard of review employed for a motion to dismiss under Rule 12(b)(6). Sensations, Inc. 

v. City of Grand Rapids, 526 F.3d 291, 295 (6th Cir. 2008). “For purposes of a motion for 

judgment on the pleadings, all well-pleaded material allegations of the pleadings of the opposing 

party must be taken as true, and the motion may be granted only if the moving party is 

nevertheless clearly entitled to judgment.” JPMorgan Chase Bank, N.A. v. Winget, 510 F.3d 

577, 581 (6th Cir. 2007) (citation and quotation marks omitted).

III.

We turn first to plaintiffs’ constitutional claim. Plaintiffs argue that their foreclosure 

violated the Due Process Clause of the Fifth Amendment. Constitutional claims require state 

action. Northrip v. Fed. Nat’l Mortg. Ass’n, 527 F.2d 23, 25 (6th Cir. 1975). The dispositive 

issue in the present case is whether Freddie Mac is a state actor. If so, then the foreclosure was 

required to comply with constitutional due process. However, we hold that Freddie Mac is not a 

state actor. Accordingly, the foreclosure did not violate the Fifth Amendment. 

Freddie Mac and its companion, Fannie Mae, are Government-Sponsored Enterprises 

(“GSEs”) that purchase and securitize residential mortgages. In 2008, Congress passed the 

Housing and Economic Recovery Act (“HERA”). Pub. L. No. 110-289, 122 Stat. 2654 (codified 

at 12 U.S.C. § 4511). HERA, among other things, established the Federal Housing Finance 

Authority (“FHFA”) and by statute empowered it to take conservatorship of Fannie Mae and 

Freddie Mac. Plaintiffs do not argue that before FHFA’s conservatorship, Freddie Mac was a 

private actor. Rather, plaintiffs argue that FHFA’s conservatorship converted Freddie Mac from 

a private actor to a state actor. We disagree. 
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Our existing precedent resolves this issue. In Mik v. Federal Home Loan Mortgage 

Corporation, 743 F.3d 149, 168 (6th Cir. 2014) (citing Lebron v. Nat’l R.R. Passenger Corp., 

513 U.S. 374 (1995)), we held as a matter of law that Freddie Mac is not a state actor. In so 

doing, we cited with approval and relied upon authority expressly rejecting arguments identical 

to those plaintiffs raise. Id. Plaintiffs offer no reason to depart from Mik’s holding. 

Accordingly, we are bound by precedent to hold that Freddie Mac is not a state actor. We also 

note that every district court that has confronted the question has reached the same conclusion. 

See, e.g., Dias v. Fed. Nat’l Mortg. Ass’n, 990 F. Supp. 2d 1042, 1062 (D. Haw. 2013); Lopez v. 

Bank of America, N.A., 920 F. Supp. 2d 798, 801 (W.D. Mich. 2013); Herron v. Fannie Mae, 

857 F. Supp. 2d 87, 95 (D.D.C. 2012). Additionally, although we acknowledge that state court 

decisions regarding federal constitutional issues are not binding on us, Commodities Exp. Co. v. 

Detroit Int’l Bridge Co., 695 F.3d 518, 528 (6th Cir. 2012), we also note that the highest 

Michigan state court to consider the issue has also concluded that the GSEs are not state actors. 

Fed. Home Loan Mortg. Ass’n v. Kelley, ___ N.W.2d ___, No. 315082 (Mich. Ct. App. Aug. 26, 

2014). For these reasons, plaintiffs’ claims that they were entitled to constitutional due process 

during their foreclosure proceeding fails as a matter of law. 

Moreover, we would reach this same conclusion even without reliance on Mik. Under 

Supreme Court precedent, a necessary condition precedent for a conclusion that a once-private 

entity is a state actor is that the government’s control over the entity is permanent. Lebron, 

513 U.S. at 399. Under HERA, Congress, by statute, empowered the FHFA to become

conservator for Freddie Mac for the limited purpose of “reorganizing, rehabilitating, or winding 

up [its] affairs.” 12 U.S.C. § 4617(a)(2). This is an inherently temporary purpose. Accordingly, 
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even if we had not previously decided Mik, we would reach the same conclusion: that following 

FHFA’s conservatorship, Freddie Mac is not a state actor. 

IV.

To the extent that plaintiffs challenge the foreclosure proceeding itself and seek to have 

us set it aside, these claims also fail because plaintiffs lack standing to challenge the foreclosure. 

Under Michigan law, once the statutory redemption period expired, “all of [a] plaintiff’s 

rights in and title to the property were extinguished.” Bryan v. JPMorgan Chase Bank, 

848 N.W.2d 482, 485 (Mich. Ct. App. 2014) (citation omitted). Therefore, once the redemption 

period lapses, a former property owner may not assert any claims with respect to the property. 

See id. The filing of a lawsuit—even one filed prior to 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. Baron, 

167 N.W.2d 784, 785 (Mich. 1969)). 

Here, plaintiffs’ standing argument turns on their separate breach-of-contract claim. 

Specifically, plaintiffs argue that they have standing to challenge the foreclosure agreement 

because Freddie Mac, through its servicing agent, Wells Fargo, breached the TPP agreement. 

Even if we found plaintiffs’ breach of contract claim meritorious,3that would still not be a basis 

to set aside the foreclosure. As the Michigan courts have held, “the mortgagor’s claims of fraud, 

irregularity, accident, or mistake [sufficient to set aside the foreclosure] must relate to the

sheriff’s sale itself, not to ‘underlying equities, if any, bearing on the instrument . . . .’” Bank of 

 

3We do not find these claims meritorious, see infra Part IV. 
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N. Y. Mellon Trust Co. Nat’l Ass’n v. Robinson, No. 311724, 2013 WL 6690678 at *2 (Mich. Ct. 

App. Dec. 19, 2013) (quoting Reid v. Rylander, 258 N.W. 630, 631 (Mich. 1935)). Based on this 

record, plaintiffs have not demonstrated fraud or irregularity related to the sheriff’s sale itself—

they have therefore failed to overcome the presumption that their title to the property was 

extinguished upon the expiration of the redemption period. Accordingly, plaintiffs lack standing 

to challenge the foreclosure, and the district court properly dismissed plaintiffs’ state law claims 

challenging the foreclosure. 

V.

Plaintiffs raise two arguments related to the TPP. Neither has merit. 

First, plaintiffs argue that they were told by Freddie Mac that, upon completion of the 

TPP they would receive a permanent loan modification. Plaintiffs argue that these 

representations were false and constituted fraud. We agree with the district court’s dismissal.

Plaintiffs were offered a permanent modification, but there is no evidence they ever 

accepted this offer. In May 2010, plaintiffs received a letter indicating that they had completed 

the trial modification and that they would be receiving documentation for a permanent 

modification. That document stated that plaintiffs were required to “review, sign[,] and return 

the agreement to us as soon as possible. We cannot complete your loan modification without 

your signed agreement.” (Emphasis added.) (Id.). There is no indication in the record that 

plaintiffs ever returned the signed permanent modification agreement. In other words, there is no 

evidence that plaintiffs ever accepted Freddie Mac’s offer for a permanent modification. 

Plaintiffs, in their counter-complaint, indeed admit that they never accepted this offer because 

the “loan modification amount [in the permanent modification offer] was totally different and 

significantly higher than [plaintiffs’] payments before applying for a modification.” But 
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plaintiffs point to no evidence that Freddie Mac ever committed to specific terms for the 

permanent modification, nor does there appear to be any such evidence in the record. Indeed, the 

TPP specifically states that, if the homeowner is eligible for a permanent modification, “the 

lender will determine the new payment amount” going forward. Contrary to their arguments, 

plaintiffs received exactly what they were promised—an opportunity for a permanent 

modification. The fact that they were dissatisfied with the terms of the permanent modification 

and rejected the offer is not a basis for a finding of fraud. 

Second, plaintiffs argue that Freddie Mac breached the TPP agreement by foreclosing,

despite the fact that they had made the payments required by the TPP. However, as the district 

court noted, the TPP specifically stated that the lender’s acceptance of payments under the TPP

“will be without prejudice to, and will not be deemed a waiver of, the acceleration of the loan or 

foreclosure action and related activities and shall not constitute a cure of [the mortgagor’s] 

default . . . .” In other words, the TPP is not an agreement not to foreclose. To the contrary, it 

specifically reserves the right to foreclose even though payments were made. Accordingly, 

plaintiffs’ argument that the foreclosure constituted a breach of the TPP is meritless.

VI. 

For these reasons, we affirm the judgment of the district court.