Is the bank required to hold both the mortgage and note to properly foreclose in Massachusetts?

6 March 2012

Described by some as the “note and mortgage defense,” this is the question to be decided by the Massachusetts Supreme Judicial Court (“SJC”), the highest appellate court in Massachusetts, at any time now.  The case is titled Eaton v. Federal National Mortgage Ass’n.  The initial briefs have been filed, oral arguments have finished, and even the SJC extended its own deadline to issue its decision.  Moreover, it asked for supplemental briefs responding to particular questions, which were filed.  It is any day now.

Many legal practitioners are waiting with bated breath for the decision to be made, especially real estate attorneys, foreclosure attorneys, bankruptcy attorneys, and the few others that practice in what it known as “foreclosure defense “ (like the author of this post).  The effect of this decision, if it does rule that a foreclosing party (the “mortgagee,” the entity holding the mortgage, usually a bank) must hold both the mortgage and note to properly foreclose, is predicted by many to be tremendous.  Here is the reason.

It has generally been accepted under Massachusetts law that only the mortgagee is required to be held by the foreclosing party (mortgagee).  Based in part on what has been exposed about the requirement that the foreclosing party just properly hold the mortgage (to understand that, you must read the Ibanez decision, and maybe the Bevilacqua decision), it is estimated that a requirement on the foreclosing party to hold both the mortgage and the note will put into question the validity of many more thousands of prior foreclosures.  It appears that the SJC was concerned too about the magnitude of the effect of ruling both the mortgage and note were required.  This author has been informed the particular questions the SJC requested responsive supplemental briefs to answer indicate this concern.

For those hoping to defend against a pending foreclosure this may sound like good news.  However, those same people need to keep in mind that this desired possible outcome of the Eaton case may effect their title (right to ownership) in the event a foreclosure occurred on the property to prior owners.  This means the dog some people think that they have in this fight, if it wins, may turn around to bite them.

In the event that you seek legal help to defend against foreclosure or otherwise have legal needs concerning maintaining your home, give us a call.

Massachusetts foreclosure defense; what has Massachusetts done to help homeowners avoid foreclosure?

3 January 2011

States across the country have passed various laws to aid their residential homeowners to face the foreclosure crisis that has been sweeping the country. Massachusetts has passes two different Acts, the second largely building on the provisions of the first, directly aimed at helping Massachusetts homeowners keep their homes and avoid foreclosure. The first was “An Act to Preserve and Protect Home Ownership”, which applied to foreclosures initiated on or after May 1, 2008. It was designed to help financially distressed homeowners with foreclosure relief. Its most important component was a “right to cure,” which provided homeowners a period of time to pay a mortgage arrearage/delinquency and avoid entering the usual foreclosure process in Massachusetts. Massachusetts then went further to protect homeowners. Massachusetts enacted "An Act to Stabilize Neighborhoods Through the Protection of Tenants of Foreclosed Properties" which in pertinent part became effective August 7, 2010. It extended the right to cure established by the prior law to 150 days, unless the foreclosing entity took certain steps, including “engag[ing] in a good faith effort to negotiate a commercially reasonable alternative to foreclosure.” If the lender complies and the negotiations do not work, it can start the usual foreclosure process earlier than the 150 days, but no less than the 90 days established by the first Act.

The aim of these Massachusetts laws is clear; get the lenders to the bargaining table. This is necessary because sources report that the federal programs, such as the (Obama’s) Home Affordable Modification Program (HAMP), have not worked as expected and widespread foreclosures are expected to continue for many months to come.

Keep in mind, this posting only briefly discusses one part, albeit an important part, of these Massachusetts foreclosure laws, so there may be other parts that could help you. With so much as stake, it is advisable to consult with an attorney to learn how these laws, and other foreclosure defense related laws, could help you.