Generally, in order to foreclose on a mortgage, the mortgagee must prove that a mortgage was granted and that the there is an underlying debt for which the mortgage is used to secure. Where there is no debt, a mortgage is ineffective.
In Sallie v Fifth Third Bank, the Michigan Court of Appeals considered whether a mortgagee could foreclose by advertisement without producing a promissory note. The Court of Appeals ruled that a promissory note does not need to be produced if: (1) the mortgagee has a valid mortgage; (2) the mortgage contains a power of sale clause; (3) the foreclosing party either owns the indebtedness or has an interest in the indebtedness that is secured by a mortgage; and (4) the mortgagee can prove ownership of the underlying debt by another method.
The Court of Appeals relied on longstanding Michigan case law as well as Michigan’s foreclosure by advertisement statute, MCL 600.3204, which,h does not require the production of the promissory note. In Sallie, although the promissory note was lost, the bank was able to establish that it owned the plaintiff’s debt, that the mortgage was valid, that the mortgage contained a power of sale clause, and the defendant was able to prove the balance remaining on the note. As a result, the bank was entitled to foreclose on the mortgage.
