The Highest Court in Massachusetts has made foreclosure just a little bit more complex and difficult for lenders. More specifically, in June of this year, the Massachusetts Supreme Judicial Court in the case of Eaton v. Federal National Mortgage Association, held that a bank who seeks to foreclose against an owner of real estate in MA must have in its possession not only the original notarized mortgage, but now must also have the original notarized promissory note. These are two separate documents, and the paper trail required is now doubled, which clearly provides additional protection for consumers and burdens of standing for lenders seeking to effectuate its alleged rights to foreclose on a property. This additional requirement will now likely delay many foreclosures due to the fact that when loans are sold from one lender to another, many papers seem to get lost and even if the mortgage is present, the second document, the note, must also be present.
If a homeowner is going to defend against a foreclosure in Massachusetts, a good first step is to send a certified letter to the loan servicer demanding a certified copy of the original mortgage, and original note pursuant to the General Laws of Massachusetts, Chapter 244. While foreclosure law varies from state to state, the Massachusetts decision highlights an important universal rule; you can not take a home if you do not own the right to do so. In simple terms, in order for a bank to foreclosure they must prove that the bank is entitled to receive the monthly mortgage payments, and simply the fact that a consumer was paying them is not enough, the Court will now require the proper paperwork to show ownership, or more succinctly, as it was recently put by Henry J. Sommer, supervising attorney at the Consumer Bankruptcy Assistance Project, “The basic fact, which I think is true anywhere, is that if you don’t own a mortgage and note, you don’t have a right to foreclose on somebody’s house,” he said. “That is really what this decision boils down to”.
One significant comment of caution when asserting the note defense is that this holding does not seem to be retroactive. By that, I mean to say that this will not help homeowners who have already been foreclosed upon or those in the process prior the June 22, 2012. If however, a notice to foreclose has been received subsequent to the June 22 holding, the defense is not only valid but a must first line of defense against banks seeking to take a homeowner’s or investor’s real estate for lack of payment.
If you are facing a foreclosure action, your best bet is to immediately seek the counsel of an experienced debt relief attorney in your state.