Articles Posted in Banking

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Plaintiff filed suit against Deutsche Bank, seeking a declaratory judgment that the bank's foreclosure of the mortgage on plaintiff's home was invalid and seeking to quiet title to the property. The superior court granted the bank's motion to dismiss. The court concluded, as did the trial court judge, that a foreclosing mortgagee's failure to comply with G. L. c. 244, § 15A, by failing to send the postforeclosure notices required by the statute, does not render the foreclosure void. In this case, where the provision in question does not set forth preforeclosure requirements that are a part of the foreclosure process, the Bank's failure to comply with section 15A's postforeclosure notice provisions did not render the foreclosure void. Accordingly, the court affirmed the judgment. View "Turra v. Deutsche Bank Trust Company Americas" on Justia Law

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In Suffolk I, the Supreme Judicial Court held that Reading Co-Operative Bank (Bank) was allowed to require Suffolk Construction Company, Inc. (Suffolk) to perform fully Suffolk’s obligations pursuant to a collateral assignment of payments under a subcontract between Suffolk and Benchmark Mechanical Systems, Inc. (Benchmark) to secure a debt owed by Bankmark to the Bank. Suffolk subsequently commenced this action to recover the surplus that resulted when the Bank applied that collateral to satisfy Benchmark’s debt. Suffolk’s equitable claims for implied subrogation and implied indemnification were dismissed for failure to state a claim, and Suffolk’s common-law claims were dismissed as time-barred. The Supreme Judicial Court affirmed in part and reversed in part, holding (1) Suffolk’s common-law claims were time-barred; but (2) Suffolk stated viable equitable claims to prevent Benchmark’s potential windfall and unjust enrichment for which relief can be granted. View "Suffolk Constr. Co., Inc. v. Benchmark Mechanical Sys., Inc." on Justia Law

Posted in: Banking, Contracts

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The Federal National Mortgage Association (Fannie Mae) filed a complaint for summary process in the Housing Court to establish its right to possession of the Rego house, which Fannie Mae purchased at a foreclosure sale. The Regos argued that the foreclosure sale conducted by GMAC, which held the mortgage, was void because GMAC's attorneys had not been authorized by a prior writing to undertake the actions set forth in G. L. 244, 14. They also asserted an equitable defense and counterclaims. The judge granted Fannie Mae summary judgment "as to possession only," and scheduled a bench trial on the counterclaims, but later dismissed the counterclaims for lack of subject matter jurisdiction. The Massachusetts Supreme Judicial Court vacated. The foreclosure suffered no defect on the asserted ground that GMAC failed to provide such authorization to its attorneys, but the Housing Court has limited authorization to entertain counterclaims and an equitable defense to the foreclosure sale in the summary process action. View "Fed. Nat'l Mortgage Ass'n v. Rego" on Justia Law

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At issue in this case was a 2006 amendment to the “obsolete mortgage” statute, under which a mortgage becomes unenforceable after a certain number of years. A mortgage in which the term or maturity date is stated becomes unenforceable five years after the expiration of the term, and a mortgage in which the term or maturity date is not stated becomes unenforceable thirty-five years after recording. Here, Defendant conducted a foreclosure auction purporting to sell certain property that secured two mortgages held by Defendant. At the time, both mortgages would be unenforceable under the amended obsolete mortgage statute if the five-year statute of limitations was applicable. Plaintiff sought a declaration that the mortgages were discharged under the obsolete mortgage statute and that the foreclosure auction was null and void. A land court judge granted partial summary judgment for Plaintiff, concluding that a reference in the mortgages to the term of the underlying debt was sufficient to state the “term or maturity date of the mortgage.” The Supreme Judicial Court affirmed, holding (1) the two mortgages were subject to the five-year period and thus were discharged under the obsolete mortgage statute; and (2) the application of the statute in this case did not violate due process and contracts clause protections. View "Deutsche Bank Nat’l Trust Co. v. Fitchburg Capital, LLC" on Justia Law

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At issue in this appeal was whether a respondent in a try title action may test the substantive merits of a petition’s claims in the first step of such an action, where the first step requires that the petition satisfy the jurisdictional elements of the statute. Petitioner in this case filed a petition to try title in the Land Court asserting that a purported assignment of a mortgage was invalid, thereby challenging a foreclosure by a Bank as trustee. Respondents filed motions to dismiss for failure to state a claim because, at the time of filing, the Bank as the assignee of the mortgage had already foreclosed on Petitioner’s mortgage. The Land Court allowed the motion, concluding that Petitioner’s petition failed to sufficiently allege effective record title, which in turn resulted in a lack of standing, because none of the allegations established any ground on which the assignment could be found invalid. The Supreme Court affirmed, holding (1) a petitioner claiming defect in the legal title of a purported mortgagee may only meet the jurisdictional element of an “adverse claim” after that mortgagee has foreclosed; and (2) the judge correctly considered the merits of Petitioner’s claims as a necessary step in determining the absence of his record title, and therefore, dismissal with prejudice was proper. View "Abate v. Fremont Inv. & Loan" on Justia Law

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In 2011, in response to an increased number of foreclosures, the City of Springfield enacted two ordinances addressing properties left vacant during or after the foreclosure process. The mediation ordinance established a program requiring mandatory mediation between mortgagors and mortgagees. The foreclosure ordinance required owners of buildings that are vacant or undergoing foreclosure to register with the City. Six banks holding mortgage notes on properties in the City (Plaintiffs) filed suit seeking declaratory and injunctive relief from the enforcement of the ordinances. The federal district court allowed the City’s motion for summary judgment. Plaintiffs appealed, and the First Circuit certified two questions to the Supreme Judicial Court. The Court answered (1) the foreclosure statute preempts the mediation ordinance in whole but does not preempt the foreclosure ordinance; (2) the foreclosure ordinance is preempted by the Massachusetts Oil and Hazardous Material Release Prevention Act and the state sanitary code; and (3) the foreclosure ordinance does not impose an unlawful tax in violation of the Constitution of the Commonwealth of Massachusetts. View "Easthampton Savings Bank v. City of Springfield" on Justia Law

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On April 12, 2010, U.S. Bank National Association initiated a summary process action against Defendant, seeking to evict him from property he owned following the property’s sale to the Bank at a foreclosure auction. On May 25, 2012, a judge entered judgment in favor of the Bank for possession. Defendant appealed, arguing that the foreclosure sale was void because the notice of his right to cure a default did not satisfy the provisions of Mass. Gen. Laws ch. 244, 35A, which gives a mortgagor of residential real property a ninety-day right to cure a payment of default before foreclosure proceedings may be commenced. The Supreme Judicial Court affirmed, holding (1) section 35A is not one of the statutes relating to the foreclosure of mortgages by the exercise of a power of sale, and (2) that being the case, and given the deficiencies in the steps Defendant took to obtain relief, Defendant was precluded from challenging the Bank’s compliance with section 35A in this summary process action. View "U.S. Bank Nat'l Ass'n v. Schumacher" on Justia Law

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At issue in this appeal was Eaton v. Fed. Nat’l Mortgage Ass’n, which held that a foreclosure by power of sale is invalid unless a foreclosing party holds the mortgage and also holds either the underlying mortgage note or acts on behalf of the note holder. In the instant case, Plaintiffs defaulted on their mortgage payments, and Mortgage Electronic Registration Systems (MERS) sought to foreclose on the property. Plaintiffs filed a complaint against MERS claiming that MERS did not have standing to initiate foreclosure proceedings because it was not the holder of the promissory note or an authorized agent of any note holder. The superior court dismissed the complaint. Before Plaintiffs’ appeal was heard, the Supreme Court decided Eaton. The Supreme Court subsequently vacated the dismissal of Plaintiffs’ claim alleging a lack of authority to foreclose, holding (1) Eaton applies to cases, such as the instant case, that preserved the issue presented in Eaton and that were pending on appeal as of June 22, 2012; and (2) therefore, Plaintiffs’ complaint should not have been dismissed for failure to state a claim on the grounds that MERS lacked the authority to foreclose. Remanded. View "Galiastro v. Mortgage Elec. Registration Sys., Inc." on Justia Law

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In each of these three consolidated cases plaintiff banks brought summary process actions against defendants, former homeowners-mortgagors, after foreclosure. Each defendant raised several defenses and counterclaims in his or her answer to the complaint, including challenges to the bank's right to possession and title as derived through foreclosure sale. Each bank filed a motion to strike the affirmative defenses and to dismiss the counterclaims, arguing that the only defenses and counterclaims available in summary process are those related to landlord-tenant relationships between the parties and those challenging title based on a failure to strictly comply with the power of sale provided in the mortgage. The housing court judge (1) granted the defendants' motions as to landlord-tenant-related defenses and counterclaims, and (2) denied the defendants' motions as to the other defenses and counterclaims, including those challenging title. The Supreme Court affirmed, holding that the housing court has jurisdiction to hear defenses and counterclaims challenging the title of a plaintiff in a post-foreclosure summary process action and has the authority to award damages in conjunction with such counterclaims. View "Bank of Am., N.A. v. Rosa" on Justia Law

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Plaintiffs refinanced their home through Lender. The monthly payment on the loan was $600 greater than Plaintiffs' total monthly income. After the mortgage was funded, it was sold and assigned to Bank. Servicer serviced the loan. After Plaintiffs defaulted on the loan, Bank foreclosed on the mortgage. Plaintiffs subsequently brought this action asserting violations of the Consumer Protection Act, the Predatory Home Loan Practices Act, and the Borrower's Interest Act, and asserting that the loan was unenforceable because it was unconscionable. A superior court judge granted summary judgment to Defendants, Bank and Servicer, on all claims based on the ground that Defendants, as assignees, had no liability for the acts of Lender. The Supreme Court (1) reversed summary judgment in favor of Bank, holding that Bank was not shielded from liability as a matter of law by virtue of its status as an assignee and that Bank failed to establish the absence of material issues of disputed fact entitling it to judgment on any individual claim; and (2) affirmed summary judgment in favor of Servicer because Servicer was not shown to be an assignee and Plaintiffs offered no alternative basis on which Servicer might be held liable. Remanded. View "Drakopoulos v. U.S. Bank Nat'l Ass'n" on Justia Law