Over the past few months, several attorneys have mentioned how they're anxiously awaiting the Supreme Judicial Court's decision in the Eaton case. An article by Ed Bloom, the immediate past president of the Real Estate Bar Association of Massachusetts in the March 2012 edition of REBA News does a good job of explaining why the Eaton decision is so anxiously awaited. In Eaton, a Superior Court judge invalidated a foreclosure on the grounds that the entity that conducted the foreclosure did not also have possession of the promissory note secured by the mortgage. This is not to be confused with the issue in Ibanez where the entity conducting the foreclosure did not own the mortgage that was being foreclosed. In Eaton, the foreclosing entity did own the mortgage, just not the note.
According to Attorney Bloom, if the SJC upholds the Superior Court decision in Eaton and applies it retroactively, "every real estate title in Massachusetts that has a foreclosure in its back title will become unmarketable, because there is no way for anyone examining record title to determine if a foreclosing mortgagee possessed the note at the time of foreclosure."
Because promissory notes have never been recorded, there is no way to tell who owns the note at any given time just by looking at the records at the registry of deeds. Consequently, I believe Attorney Bloom's concerns are well-founded. As soon as the SJC issues its decision in Eaton, we'll write about it here.