Sixth Circuit Rejects Due Process Clause Challenge To Michigan Foreclosure

The state of Michigan has supplied the Sixth Circuit with no shortage of foreclosure-related decisions since the financial crisis, but the court's recent decision in Garcia v. Federal National Mortgage Association, No. 14-1687, — F.3d — (Apr. 7, 2015), ruled on a particularly interesting issue: whether the Federal National Mortgage Association's (Fannie Mae) foreclosure upon the plaintiffs' home violated their constitutional due process rights.  The court answered, "No."

The plaintiffs obtained a home loan in 2003.  In 2007, they fell behind on their payments and defaulted on the loan.  In early 2011, plaintiffs received a letter about the default and potential loan modification, and they were later offered a loan modification for a three-month trial period.  Bank of America, the mortgage holder, also offered them a permanent loan modification in May 2012, but the plaintiffs never executed and returned the required paperwork to do so.