Minnesota Supreme Court Affirms That Foreclosing Parties Must Record Mortgage Assignments Prior To Initiating Foreclosure By Advertisement

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On April 17, the Minnesota Supreme Court affirmed an intermediate appellate court ruling that held (i) a strict compliance standard applies to Minnesota’s foreclosure by advertisement process, and (ii) a foreclosure by advertisement is void where the foreclosing party fails to record all mortgage assignments prior to initiating the foreclosure process. Ruiz v. 1st Fidelity Loan Servicing, LLC, No. A11-1081, 2013 WL 1629192 (Minn. Apr. 17, 2013). The case arose after an assignment correcting the name of the assignee was recorded on the same day that the assignee (i) published the first notice of foreclosure sale, and (ii) recorded a notice of pendency of foreclosure. After the assignee foreclosed on the property, the mortgagor brought an action in Minnesota District Court seeking to void the foreclosure by arguing that foreclosing parties must comply strictly with Minnesota’s foreclosure by advertisement process. The district court granted summary judgment in the assignee’s favor, concluding, among other things, that a substantial-compliance standard, rather than a strict compliance standard, applies to Minnesota’s foreclosure by advertisement process. The Minnesota Court of Appeals reversed the district court on appeal, holding instead that a strict compliance standard applies to Minnesota’s foreclosure by advertisement process. On further appeal, the state supreme court analyzed the statutory language containing Minnesota’s foreclosure by advertisement process and determined that the plain language of the statute unambiguously requires all mortgage assignments to be recorded before a foreclosing party has a right to engage in the process of foreclosure by advertisement. As a result, the court determined that the assignee’s foreclosure was void and that the case should be remanded to the district court for further proceedings.