Strict Compliance with Mortgage Recording Requirements Is Required

A foreclosure by advertisement is void if the Assignment Recording Statute, Minnesota Statute § 580.02, is not strictly complied with. In 2013 the Minnesota Supreme Court held that a foreclosing mortgagee must strictly comply with the statutory requirement that all assignments of the mortgage be recorded prior to beginning the process of foreclosure.

Ruiz c. 1st Fidelity Loan Servicing

In Ruiz v. 1st Fidelity Loan Servicing, the plaintiff purchased a property with a mortgage from Chase Bank in 2005. Ruiz v. 1st Fidelity Loan Servicing, 829 N.W.2d 53 (Minn. 2013). Chase then assigned the mortgage to JP Morgan Chase Bank in 2006. Ruiz defaulted in September 2008, there was a second assignment in September 2009 that was recorded in November 2009. The second assignment listed the assignee as “1st Fidelity” rather than 1st Fidelity Loan Servicing, LLC. In March 2010 1st Fidelity sent Ruiz a demand letter and eventually commenced foreclosure proceedings by advertisement. The first public notice of foreclosure was on May 18, 2010. There was also a third assignment that was recorded on May 18, 2010, which listed “JP Morgan Chase Bank, NA” as the assignor and 1st Fidelity Loan Servicing, LLC as the assignee. 1st Fidelity purchased the property at the foreclosure sale on November 30, 2010 and the plaintiff failed to redeem the property. The plaintiff then sued alleging that 1st Fidelity had failed to strictly comply with the assignment recording requirement, the notice of pendency of foreclosure requirement, the pre-foreclosure counseling notice requirement and she also alleged wrongful eviction. In addition, plaintiff sought a declaration that the Sheriffs sale was void.

The Supreme Court held that strict compliance with the assignment recording requirement is required. The Court did only focus this opinion on the assignment recording requirement, Minnesota Statute § 580.02(3), which provides “ to entitle any party to make such foreclosure, it is requisite that the mortgage has been recorded and, if it has been assigned, that all assignments thereof have been recorded.” The Court ultimately found that 1st Fidelity had not strictly complied with the assignment recording requirement, noting that the third assignment was not recorded before the beginning of the foreclosure proceeding. In so holding, the Court rejected an argument that the recording date of the third assignment should relate back to the recording date of the second assignment because the third was a “corrective assignment.” The Court rejected that argument. In interpreting how this case will affect lenders, the case is strictly limited to compliance with the assignment recording requirement only.