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Michigan Supreme Court OKs foreclosure practice that lower court found violated state law

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Steve Carmody/Michigan Radio
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Consumer advocates are disappointed by a Michigan Supreme Court decision.   

The high court today reversed an appeals court decision which found the mortgage industry violated state law by using a national group to file foreclosure notices in Michigan.  

The lower court found the Mortgage Electronic Registration System, or MERS, didn't have an interest in the mortgage and thus was not allowed to file the foreclosure paperwork.   

Lorray Brown is with the Michigan Poverty Law Program. Brown said the Supreme Court used "tortured" legal analysis to avoid following the strict wording of the law.   

“I think this is a clear case of strict statutory construction and the statute says what it says," said Brown.   

An attorney for the Michigan Bankers Association praised the  court’s decision. Attorney James Breay said it prevents the voiding of thousands of home foreclosures in Michigan.  

This decision will avoid…the possibility of a ruling that could otherwise have created chaos in Michigan’s residential mortgage market," said Breay.    

MERS is facing other legal challenges, including a potential class action suit involving Michigan counties that accuse MERS of not paying taxes on property transfers.