Homesteads and Mortgages

For years, homeowners have asked whether they need to file a new homestead after refinancing and recording a new mortgage. Our answer has typically been “we don’t know” since we believed the law to be silent on this issue. Absent any clear statutory guideline, our logic has worked as follows: Since a subsequent deed dissolves an existing homestead and since a mortgage is a type of deed, a new mortgage should dissolve an existing homestead. But many lawyers respond to that formulation by saying that no, a mortgage is not a deed; it’s a security interest and unless the homeowner signed something that expressly released the homestead, the new mortgage should have no impact.

Recently, however, someone directed me to Massachusetts General Laws chapter 188, section 6 (“Property subject to prior mortgage”) which states as follows:

Section 6. Property which is subject to a mortgage executed before an estate of homestead was acquired therein, or executed afterward and containing a release thereof, shall be subject to an estate of homestead, except as against the mortgagee and those claiming under him, in the same manner as if there were no such mortgage. If the owner of the equity in such property redeems the mortgage, he shall not be allowed to claim under it against the owner of the estate of homestead, his or her surviving spouse, heirs or assigns; but if said owner of the estate of homestead, his or her surviving spouse, heirs or assigns offers to redeem the residue above the homestead estate and the mortgage from a sale or set-off on execution and the judgment creditor has redeemed the mortgage, the amount paid for such redemption of the mortgage, with interest and expenses, shall be included in the amount to be paid for the redemption of said residue.

There doesn’t seem to be much ambiguity in that first sentence – “Property which is subject to a mortgage executed before an estate of homestead was acquired therein, or executed afterward and containing a release thereof, shall be subject to an estate of homestead, except as against the mortgagee and those claiming under him, in the same manner as if there were no such mortgage.” Does anyone read it differently?