More from Mass Lawyers Weekly

Each edition of Mass Lawyers Weekly contains a “This Week’s Decisions” section which contains summaries of decisions announced by various Federal and State courts within the Commonwealth.  The June 11, 2012 edition contains a number of cases related to mortgages.  Here’s a sampling:

MIT Financial Group v Palmer (US District Court) involved a suit on a promissory note with a counterclaim under MGL c.93A that the note violated the state’s Predatory Home Loan Practices Act.  The note in question was of relatively short duration with a balloon payment at the end.  Because the amount of the balloon payment, when averaged with the ordinary monthly payments, caused the average monthly payment to exceed a certain percentage of the borrower’s income (and ability to pay), the loan was deemed to be a “high cost home mortgage loan” under the Predatory Home Loan statute.  For such a note to be valid and enforceable, the borrower in advance of the loan was required to receive documented credit counseling from an approved agency.  This the borrower did not do.  As a result, the loan was void and the lender (an entity not normally in the business of making home loans) was liable under the state’s Consumer Protection law.

US Bank v Twomey (Superior Court) This case involved the viability of a mortgage that was erroneously discharged by the lender.  The plaintiff filed suit to reinstate the mortgage which it claimed had been discharged as the result of a scrivener’s error.  The defendant/borrower, an attorney with 15 years experience in residential closings, claimed that the mortgage had been discharged and could not be reinstated.  The court ruled for the lender noting that the defendant never claimed that the mortgage had been paid and that the defendant had in several ways acknowledged the existence of the mortgage.  The court made note of the fact that the defendant and her family had continued living in the house for more than two years while this litigation was pending without making a single payment on the $650,000 mortgage and while spending substantial sums on a second home, luxury cars, and private school tuitions.  

Several other cases appear to have been brought by borrowers who lost their homes to foreclosure and who asserted a variety of claims of defects in documentation and procedure.  None of the issues in these cases appeared to be particularly noteworthy.  Instead, their presence on the docket of the appellate court seemed to have more to do with the persistence of the homeowners/borrowers rather than the relative merits of the defenses.  Such cases appear to be the inevitable by-product of the thousands of foreclosures that have been conducted over the past few years.  Undoubtedly there will be more of this kind to follow.