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The Court deems this matter appropriate for decision without oral argument. 

See Fed. R. Civ. P. 78(b); E.D. Mich. LR 7.1(f)(2).

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

LASALLE BANK NATIONAL ASSOCIATION

AS TRUSTEE, 

Plaintiff/Counter-Defendant,

vs. Case No. 09-13526

RODERIC RAY and MATTIE RAY,

Defendants/Counter-Plaintiffs HON. AVERN COHN

__________________________________/

RODERIC RAY and MATTIE RAY,

Third Party Plaintiffs,

vs.

HOME LOAN SERVICES, INC.,

Third Party Defendant

__________________________________/

MEMORANDUM AND ORDER

GRANTING PLAINTIFF/COUNTER-DEFENDANT AND THIRD PARTY

DEFENDANT’S MOTION FOR SUMMARY JUDGMENT (Doc. 11)1

I. Introduction

This is one of an increasing number of cases spawned from the collapse of the

housing market. In 2006, Roderick and Mattie Ray borrowed $175,000.00 from First

Franklin Financial Corporation (“First Franklin”), a division of National City Bank, to

purchase a home in Detroit. The loan was secured by a mortgage. After the Rays

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The counterclaim/third-party claim does not contain a Count III.

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The counterclaim/third-party claim contains two “Count IVs”

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defaulted on the loan, Home Loan Services, Inc. (“HLS”), the servicer of the loan,

foreclosed on the property. LaSalle Bank National Association (“LaSalle”) purchased

the property at the sheriff’s sale. After the six month redemption period expired, LaSalle

initiated eviction proceedings against the Rays in 36th District Court. In response, the

Rays filed a counterclaim in the 36th District Court against LaSalle and a third-party

claim against HLS, presenting the following claims:

Count I violation of Michigan Brokers, Lender and Servicer Lending Act,

M.C.L. § 445.1651

Count II misrepresentation

Count IV2 violation of the Housing and Economic Recovery Act of 2008

Count V bad faith

Count VI violation of the Federal Home Affordable Modification Program the

Economic Stabilization Act of 2008

Count VI3 wrongful foreclosure and quiet title

Count VII exemplary damages

LaSalle and HLS removed the case to federal court on the grounds of diversity

and federal question. 

Before the Court is LaSalle and HLS’s motion for summary judgment on the

Rays’ counterclaim/third-party claim. For the reasons that follow, the motion will be

granted. 

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The Rays say they recently learned they are part of a class in a class action

case in California claiming that loans with this interest rate are discriminatory in violation

of the Fair Housing Act. 

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II. Background

On October 31, 2006, the Rays borrowed $175,000 from First Franklin to

purchase a home in Detroit. In connection with transaction, the Rays signed a 30 year,

fixed rate Note and a Prepayment Addendum to the Note (“Note”). The Note required

that the Rays make monthly payments beginning on December 1, 2006 of $1,673.18. 

The Note carried an 11.05%4 interest rate, fixed for 3 years, and would adjusted after

December 2009. To secure the loan, the Rays also executed a Mortgage, as well as a

Prepayment Rider to the Mortgage (“Mortgage”). The Mortgage granted “Mortgage

Electronic Registration, Inc. (“MERS”),” “acting solely as nominee for [First Franklin] and

[First Franklin’s] successor and assigns” a security interest in the property. The

Mortgage says that “MERS is the mortgagee under this Security Instrument.” First

Franklin is listed as the “Lender” on the Mortgage.

After the closing, on December 6, 2007, MERS, acting a “nominee” for First

Franklin, assigned its interest in the loan to “LaSalle Bank National Association as

Trustee for First Franklin Mortgage Loan Trust . . .” and LaSalle became the Trustee of

the loan. HLS became the service provider for the loan. Both the Mortgage and the

assignment were recorded.

The Rays made their first monthly payment in December 2006. They missed

their January 2007 payment but made a full payment in February 2007. 

At the time the loan was made, Roderick Ray was in the military reserves. In

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February 2007, he was deployed to Iraq. As a result, the interest rate on the Ray’s loan

was lowered, bringing the monthly payment down from $1,673.18 to $1,049.89. The

Rays made the new monthly payment from April to July, skipped August, and made a

payment in September 2007.

In February 2008, Roderick Ray returned from Iraq. At that time, the Rays were

in default. From February 2007 to March 2008, the Rays made only 9 monthly

payments, the last payment being in March 2008.

In June 2008, Nathan Nevils, an advocate retained by the Rays who worked for

the Money Store, emailed HLS stating that the Rays were looking to obtain a “short-pay

off” and were “not looking to get into a modification.” Roderick Ray says Nevils was

unsuccessful in being able to work with HLS. Roderick Ray further says that he

attempted to contact HLS, and the attorneys who handled foreclosures for HLS, to no

avail. 

HLS commenced foreclosure proceedings and scheduled a sheriff’s sale for

January 7, 2009. LaSalle purchased the property at the sale. The Rays had until July

28, 2009 to redeem; however, they took no action.

On July 30, 2009, LaSalle filed a complaint for eviction in 36th District Court. On

August 20, 2009, the Rays filed their answer, counterclaim and third–party claim in the

eviction action. 

III. Summary Judgment

Summary judgment will be granted when the moving party demonstrates that

there is “no genuine issue as to any material fact and that the moving party is entitled to

a judgment as a matter of law.” Fed. R. Civ. P. 56(c). There is no genuine issue of

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material fact when “the record taken as a whole could not lead a rational trier of fact to

find for the non-moving party.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475

U.S. 574, 587 (1986).

The nonmoving party may not rest upon his pleadings; rather, the nonmoving

party’s response “must set forth specific facts showing that there is a genuine issue for

trial.” Fed. R. Civ. P. 56(e). Showing that there is some metaphysical doubt as to the

material facts is not enough; “the mere existence of a scintilla of evidence” in support of

the nonmoving party is not sufficient to show a genuine issue of material fact. Anderson

v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). Rather, the nonmoving party must

present “significant probative evidence” in support of its opposition to the motion for

summary judgment in order to defeat the motion. Moore v. Philip Morris Co., 8 F.3d

335, 340 (6th Cir. 1993); see Anderson, 477 U.S. at 249–50. 

IV. Analysis

A. Count I - Violation of the Michigan Mortgage Brokers, Lenders, and Servicers

Licensing Act, M.C.L. § 445.1651 

In Count I, the Rays claim a violation of M.C.L. § 445.1651, the Michigan

Mortgage Brokers, Lenders, and Servicers Licensing Act (“MBLSLA”) against HLS. 

HLS says that summary judgment is appropriate because the act does not apply to it

and even if it did, HLS did not engage in any fraud or misrepresentation.

The MBLSLA states:

It is a violation of this act for a licensee or registrant to do any of the following: (a)

Fail to conduct the business in accordance with law, this act, or a rule

promulgated or order issued under this act. (b) Engage in fraud, deceit, or

material misrepresentation in connection with any transaction governed by this

act.

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The Rays are referring to the Dodd-Frank Wall Street Reform and Consumer

Protection Act, Pub.L. No. 111-203, 124 Stat. 1376. 

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M.C.L. § 445.1672. 

The MBLSLA is not applicable to HLS. By its terms, it does not apply to a

“mortgage broker, mortgage lender, or a mortgage servicer that is a subsidiary or

affiliate of a depository financial institution or a subsidiary or affiliate of a holding

company of a depository financial institution, if the depository financial institution

maintains its main office or a branch office in this state.” M.C.L. 445.1675(m). HLS was

owned by Merrill Lynch, which was owned by Bank of America, N.A. which is a

“depository financial institution” under the MBLSLA because it is a nationally chartered

bank that maintains offices in Michigan. Accordingly, the Ray’s claim against HLS for

violation of the MBLSLA must be dismissed. Accord Ridha v. Mortgage Electronic

Registration Systems, Inc., No. 10-13824, 2010 WL 4867416 (E.D. Mich. Nov. 23,

2010).

The Rays, however, argue that section 1044 of Public Law 111-2035 preempts

M.C.L. § 445.1675(m). The Rays appear to be referring to 12 U.S.C. § 25b which

provides that “a State consumer financial law shall apply to a subsidiary or affiliate of a

national bank (other than a subsidiary or affiliate that is chartered as a national bank) to

the same extent that the State consumer financial law applies to any person,

corporation, or other entity subject to such State law.” Even if the Rays are correct, 12

U.S.C. § 25b was not enacted until July 21, 2010, over a full year after this action was

filed. The Rays cite no authority that this section can be retroactively applied.

Finally, even assuming that the MBLSLA applies to HLS, this claim still fails. As

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explained below, the Rays have not made out an actionable claim for fraud or

misrepresentation. As such, their MBLSLA claim fails. See Hanning v. Homecomings

Fin. Networks, 436 F. Supp. 2d 865, 872 (W.D. Mich. 2006) (finding that MBLSLA claim

was contingent on a fraud claim and dismissing the former when had already dismissed

the latter).

B. Count II - Misrepresentation

In Count II, the Rays claim misrepresentation. This claim fails for several

reasons. First, Michigan law does not recognize claims to enforce oral promises

against financial institutions. See Crown Technology Park v. D&N Bank, FSB, 242

Mich. App. 538 (2000) (applying Michigan’s statute of frauds, M.C.L. § 566.132(2), to

bar claims, regardless of how plead, against banks to enforce alleged oral promises to

modify loans). Here, the Rays’s claim is based on an alleged oral promise that their

loan was being reviewed by HLS for a refinance or potential modification when HLS had

no intent of working with them. As such, the claim is barred.

Second, under Michigan law, actionable fraud requires proof:

(1) That defendant made a material representation; (2) that it was false; (3) that

when he made it he knew that it was false, or made it recklessly, without any

knowledge of its truth and as a positive assertion; (4) that he made it with the

intention that it should be acted upon by plaintiff; (5) that plaintiff acted in reliance

upon it; and (6) that he thereby suffered injury.

U.S. Fidelity and Guaranty Co. v. Black, 412 Mich. 99, 114 (1981) (quoting Hi-Way

Motor Co. v. Int’l Harvester Co., 398 Mich. 330, 336, 247 N.W.2d 813, 816 (1976)). 

Additionally, “a promise regarding the future cannot form the basis of a

misrepresentation claim.” Forge v. Smith, 458 Mich. 198, 212, 580 N.W.2d 876, 884

(1998). 

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The Rays have not shown that HLS made a material representation that was

false. At best, HLS reviewed the Rays’ request for modification and never indicated that

a modification would be granted. There is nothing in the record to show any

misrepresentation by HLS. Moreover, at best any alleged statement would be a

promise to conduct a review in the future and cannot give rise to a viable

misrepresentation claim. 

Finally, the claim itself has not been properly plead with particularity as required

by Fed. R. Civ. P. 9(b). To meet the particularity requirements of Rule 9(b), the plaintiff

must “specify the statements that the plaintiff contends were fraudulent, (2) identify the

speaker, (3) state where and when the statements were made, and (4) explain why the

statements were fraudulent.” Frank v. Dana Corp., 547 F.3rd 564, 569-570 (6th Cir.

2008). To survive a Rule 12(b)(6) motion to dismiss, the plaintiff's pleadings must

provide “more than labels and conclusions, and a formulaic recitation of the elements of

a cause of action will not do.” Ass'n of Cleveland Fire Fighters, 502 F.3d at 548 (quoting

Bell Atlantic, 127 S.Ct. at 1964-65).

The Rays’ allegations, found in ¶ 23 of their complaint, fail to meet these

requirements. At best, the allegations constitute recitations of the elements of

fraudulent misrepresentation and negligent misrepresentation, and are thus insufficient. 

See Ass'n of Cleveland Fire Fighters, 502 F.3d at 548. 

The Rays, however, argue that they plead a claim for fraudulent inducement. 

This argument does not save the claim. Fraud in the inducement still requires a

material misrepresentation, which has not been plead. The claim is still barred by the

statute of frauds and does not meet Rule 9's pleading requirements.

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C. Count IV and Count VI - Violation of the Housing and Economic Recovery Act and

violation of the Federal Home Affordable Modification Program

In Counts IV and VI, the Rays claim violations of federal law. Specifically, Count

IV claims a violation of section 1403 of the Housing and Economic Recovery Act

(“HERA”) and Count VI claims a violation of the Federal Home Affordable Modification

Program (“HAMP”). Each is premised on HLS’s refusal to modify their loan. These

claims fail for two reasons.

First, the statutes do not compel HLS to modify the loan. HERA requires the

Secretary of the Treasury “to encourage the servicers of the underlying mortgages,

considering net present value to the taxpayer, to take advantage of the HOPE for

Homeowners Program.” 12 U.S.C. § 5219. While under the statute “the Secretary must

encourage mortgage servicers to modify loans, the statute does not require Defendant

or other mortgage servicers to modify loans.” Hart v. Countrywide Home Loans, --- F.

Supp. 2d ----, 2010 WL 3272623, *5 (E.D. Mich. Aug. 19, 2010) (dismissing claims

under HERA and HAMP); Escobedo v. Countrywide Home Loans, Inc., No. 09cv1557

BTM (BLM), 2009 WL 4981618, at *3 (S.D. Cal. Dec. 15, 2009) (“The Agreement does

not state that Countrywide must modify all mortgages that meet the eligibility

requirements.”); Williams v. Geithner, No. 09-1959 ADM/JJG, 2009 WL 3757380, at *6

(D. Minn. Nov. 9, 2009) (concluding that loans may be modified where appropriate and

with discretion). Thus, even if the Rays were entitled to a modification, there would be

no duty imposed on HLS for which they could seek relief.

Second, even assuming the Rays were eligible for modification and assuming the

statutes impose a duty on HLS to modify their mortgage, the statutes “do not create a

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private right of action under which Plaintiff may seek relief.” Hart, supra. See also

Aleem v. Bank of America, No. EDCV 09-01812-VAP (RZx), 2010 WL 532330, *4, 2010

U.S. Dist. LEXIS 11944, *12 (C.D. Cal. Feb. 9, 2010) (“There is no express or implied

right to sue fund recipients ... under TARP or HAMP.); Zendejas v. GMAC Wholesale

Mortgage Corp., No. 1:10-CV-00184 OWW GSA, 2010 WL 2490975 (E.D. Cal. June 16,

2010) (concluding that third-party beneficiaries cannot enforce government contracts

“absent a clear intent to the contrary,” and that HAMP expresses no such intent).

Accordingly, the Rays’ claims under HERA and HAMP fail.

D. Count V - Bad Faith

In Count V, the Rays claim bad faith. They allege that HLS acted “arbitrary,

reckless, and intentional” when it represented to the Rays that it was performing

modification efforts. The Michigan Supreme Court has held that where a plaintiff has

“pleaded no more than defendant's bad-faith failure to pay its contractual obligation,” the

pleading is “insufficient to establish an independent tort action.” Isagholian v.

Transamerica Ins. Corp., 208 Mich. App. 9, 17 (1994). As the Rays have presented

nothing more than allegations of bad faith in connection with alleged contractual

obligations, this claim fails as a matter of law.

E. Count IV - Wrongful Foreclosure

In this Count, the Rays claim wrongful foreclosure and seek to quiet title against

LaSalle. This claim appears to be based on the notion that because LaSalle merged

with Bank of America, it is not a legal entity and therefore the foreclosure is voidable. 

This claim fails.

First, the Mortgage identifies MERS as the mortgagee as well as the nominee for

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the lender, First Franklin. Under the Note, MERS, as mortgagee, had the right to

foreclose on the property. After the loan was closed, MERS assigned its rights to

LaSalle. The fact that LaSalle later merged with Bank of America is irrelevant. As

explained in LaSalle and HLS’s papers, LaSalle and Bank of America were formed

under the National Bank Act, 12 U.S.C. § 1. Under that statute, which governed their

merger, the corporate existence of LaSalle was merged into Bank of America. See 12

U.S.C. § 212a. LaSalle’s interest in the loan were transferred to Bank of America, who

could properly foreclose. 

The Rays, however, now argue that MERS lacked authority to foreclose. Putting

aside this is a new ground not plead in the complaint, MERS did not foreclosure. 

Rather, HLS, the service provider, foreclosed. Moreover, Rays’ argument that MERS

could not assign its interest to LaSalle as Trustee is similarly misplaced. The Mortgage

grants MERS the power to assign, as it refers to the “successor and assigns of MERS.”

Finally, the Rays argue that the foreclosure was wrongful because the notice was

improper because it did not contain the name of the original mortgagee, First Franklin. 

This argument is not well-taken. The notice identifies the foreclosed mortgage as that

“made by [the Rays], original mortgagor(s), to [MERS], as nominee for lender and

lender’s successors and assigns, Mortgagee . . . dated October 31, 2006 . . . and

assigned by said Mortgagee to LaSalle Bank National Association as Trustee. . .” 

Paragraph (C) of the Mortgage states that “MERS is the mortgagee under this Security

Instrument.” Thus, the notice did comply with Michigan law by listing MERS as the

mortgagee. See M.C.L. § 600.3212.

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F. Count VII - Exemplary Damages

In Count VII, the Rays seek exemplary damages. Michigan law provides that

“absent allegations and proof of tortious conduct existing independent of [a breach of

contract], exemplary damages may not be awarded in common-law actions brought for

breach of a commercial contract.” Kewin v. Mass. Mutual Life Ins. Co., 409 Mich. 401,

420-21 (1980). Here, the Rays have alleged misrepresentation and violations of HERA,

HAMP, and the MBLSLA as the underlying torts to support their claim for exemplary

damages. However, as explained above, none of these claims have merit. As such,

their claim for exemplary damages must fail.

G. Expiration of Redemption Period

As LaSalle and HLS point out, another flaw in the Rays’ claims regarding their

mortgage is the fact that the claims were brought after their interest in the properly was

extinguished. Under Michigan law, legal title to a foreclosed property vests in the holder

of the sheriff's deed unless the property is redeemed within the six-month statutory

redemption period. M.C.L. § 600.3236-.3240. The redemption period and procedure

are “clearly spelled out” by statute, and the right to redemption generally “can neither be

enlarged nor abridged by the courts.” Gordon Grossman Bldg. Co. v. Elliott, 382 Mich.

596, 603, 171 N.W.2d 441, 444 (1969). Michigan law specifies foreclosure procedures,

“leaving no room for equitable considerations absent fraud, accident, or mistake.”

Senters v. Ottawa Sav. Bank, 443 Mich. 45, 55, 503 N.W.2d 639, 643 (1993). 

Here, the sheriff’s sale occurred on January 28, 2009. The redemption period

expired on July 28, 2009. The Rays did not file their counterclaim/third-party claim until

August 20, 2009. Since the Rays have not established fraud, accident or mistake in the

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 M.C.R. § 3.411(B) states, “(2) The complaint must allege, (a) the interest the

plaintiff claims in the premises; (b) the interest the defendant claims in the premises;

and (c) the facts establishing the superiority of the plaintiff's claim.” 28 U.S.C. §

2409a(d) states,”[t]he complaint shall set forth with particularity the nature of the right,

title, or interest which the plaintiff claims in the real property, the circumstances under

which it was acquired, and the right, title, or interest claimed by the United States.”

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mortgage or in the foreclosure proceeding and also failed to redeem the property, legal

title to the property transferred to the holder of the sheriff's deed upon expiration of the

redemption period. 

Moreover, as to the their claim to quiet title, the Rays must meet the

requirements set forth in M.C.R. § 3.411, or, for a federal cause of action, 28 U.S.C. §

2409a(d). These rules require that the plaintiff properly allege his or her ownership

interest in the property.6

 Additionally, Michigan Law has held that if “[p]laintiffs did not

avail themselves of their right of redemption in the foreclosure proceedings and at the

expiration of such right . . . all plaintiffs' rights in and to the property were extinguished.” 

Piotrowski v. State Land Office Bd., 4 N.W.2d 514, 517 (Mich. 1942). ‘

Because the redemption period has expired, the Rays lack standing to assert any

interest in the property. See M.C.L. § 600.3236; Piotrowski v State Land Office Bd., 302

Mich. 179, 187 (1942) (“Plaintiffs . . . lost all their right, title, and interest in and to the

property at the expiration of their right of redemption . . . .”); Mission of Love v

Evangelist Hutchinson Ministries, No. 266219, 2007 WL 1094424, at *5 (Mich. Ct. App.

Apr. 12, 2007) (“After the redemption period expired, plaintiff no longer had any right or

interest in the property, because the property had been validly purchased at a

foreclosure sale. At that point, the trial court could not grant plaintiff the relief it sought

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(title to the property) if it were successful in its suit.”).

V. Conclusion

For the reasons state above, the Rays’ claims fail as a matter of law. That said,

the Court is not unsympathetic to the Rays’ situation, one which has befallen many. 

Unfortunately, there is no remedy in federal court under these circumstances. 

Accordingly, LaSalle and HLS’s motion for summary judgment is GRANTED. 

Within ten (10) days after entry of this order, LaSalle and HLS shall advise the

Court in writing as to the status of this case, including the steps necessary to bring this

matter to a close and whether this action should remain in federal court.

SO ORDERED.

 S/Avern Cohn 

AVERN COHN

UNITED STATES DISTRICT JUDGE

Dated: February 9, 2011

I hereby certify that a copy of the foregoing document was mailed to the attorneys of

record on this date, February 9, 2011, by electronic and/or ordinary mail.

 S/Julie Owens 

Case Manager, (313) 234-5160

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