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Massachusetts: Supreme Judicial Court Clarifies Foreclosure Compliance Standard

Posted By USFN, Wednesday, February 22, 2017
Updated: Friday, February 17, 2017

February 22, 2017

by Julie Moran
Orlans Moran, PLLC – USFN Member (Massachusetts)

Judges in Massachusetts have devoted considerable energy in determining the validity of a nonjudicial foreclosure by assessing the extent to which the form of notice or procedure at issue complies with the provisions of the power of sale statute. The power of sale statute in these decisions has been broadly referenced to include sections 11-17C of Mass. G. L. c. 244. In the long line of cases stretching over a number of years, the validity of a foreclosure has largely turned on whether the targeted requirement is considered part of the foreclosure process, with strict compliance with these provisions required.

In the now famous case U.S. Bank Nat’l Ass’n v. Ibanez, 458 Mass. 637 (2011), the fact that the mortgagee was not the holder of mortgage at the time of the sale (or in Eaton v. Federal Nat’l Mtge. Ass’n., 462 Mass. 569 (2012), did not hold the note) rendered the sale invalid. The court followed a similar theory in Pinti v. Emigrant Mtge. Co., 472 Mass. 226 (2015), in that the failure of the default notice to strictly comply with paragraph 22 of the mortgage (considered part of the foreclosure process) invalidated the sale. By contrast, the court in U.S. Bank Nat’l Ass’n v. Schumacher, 467 Mass. 421 (2014), determined that the right to cure notice under G. L. c. 244, § 35A, which is sent prior to the initiation of the foreclosure process, was not part of the power of sale foreclosure process and, thus, the notice’s substantial compliance with the statute was sufficient to validate the foreclosure.

In the wake of the above-mentioned judicial opinions, there were conflicting decisions in federal and state courts as to whether the strict compliance standard would also apply to certain notices required to be sent to tenants and municipal officials after the foreclosure sale, pursuant to section 15A of G. L. c. 244, one of the so-called power of sale provisions. Recently, in a case it had transferred on its own motion from the appeals court, the Massachusetts Supreme Judicial Court (SJC) declined to extend this standard to these notices. [Turra v. Deutsche Bank Trust Company Americas, No. SJC -12075 (Jan. 30, 2017)].

The appeals court determined in Turra that the acknowledged failure by the mortgagee to send these notices did not invalidate the foreclosure. In its decision, the SJC acknowledges that in earlier cases it may have unintentionally suggested that failure to strictly comply with all provisions of G. L. c. 244, §§ 11-17C rendered the foreclosure void. The SJC stated that, instead, its intention was to focus on the actions taken by the foreclosing party during the actual foreclosure process. It pointed out that in the prior line of cases (referenced above) the statutory provisions at issue related to the relationship between the mortgagor and mortgagee, with the failure to strictly comply with the applicable statute creating potential harm to the mortgagor.

 

In affirming the appeals court’s decision in Turra, the SJC held that the post-foreclosure notices were not part of the actual foreclosure process, were directed to a third party (not the mortgagor), and the failure to send them did not create potential harm to the mortgagor.

Turra will hopefully reduce — at least by one — the type of successful challenges to foreclosures in Massachusetts.

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Note for consideration of the USFN Award of Excellence: This article is not a "Feature."

 

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