SJC Foreclosure Cases

The following is a brief summary of four cases decided by the SJC since 2011 related to foreclosures:

U.S. Bank National Association v. Ibanez
SJC-10694 – decided January 7, 2011

The foreclosing lender that purchased property at auction brought an action to quiet title due to questions about the timeliness of assignments of the mortgage.  The SJC upheld the trial judge’s decision to invalidate the foreclosure because the foreclosing bank had never been assigned the mortgage that was foreclosed.  The SJC stated that a formal, recorded assignment is not absolutely necessary (although it would be preferred) but that other documentary evidence could be offered to establish the fact of a timely assignment.  The Court also applied this holding retroactively which called into question the title of many previously foreclosed properties since the routine practice in the real estate field was to record necessary assignments after the fact.

Bevilacqua v. Rodriguez
SJC-10880 – decided October 18, 2011

U.S. Bank conducted a foreclosure sale of the home of Pablo Rodriguez without having the mortgage properly assigned to it before the foreclosure.  Before that became an issue, U.S. Bank, the purchaser at the foreclosure auction, sold the property to Francis Bevilacqua.  Because of the now-defective foreclosure in his chain of title, Bevilacqua sued to extinguish any rights Rodriguez may have in the property.  While Bevilacqua acknowledged the defect in the foreclosure, he asserted that his rights as a bona fide purchaser of the property should be superior to any rights of Rodriguez.  The SJC disagreed, holding that the untimely assignment was clear on the record before Bevilacqua purchased the property and since he was deemed to have notice of the title problem, he was unable to assert any rights as a BFP.

Eaton v. Federal National Mortgage Association
SJC-11041 – Decided June 22, 2012

Henrietta Eaton challenged the foreclosure of her property contending that the entity that conducted the foreclosure did not also hold the underlying promissory note.  The SJC held that only the actual note holder or the authorized agent of the note holder may conduct the foreclosure.  The court, however, did not apply this holding retroactively, stating that prior law on this issue was “not unambiguous.”  This was a great relief to the legal community since the practice of doing the foreclosure without holding the note was widespread.

HSBC Bank v. Matt
SJC-11101 – Decided January 14, 2013

The SJC held that a party filing a complaint under the Servicemembers Civil Relief Act must be the holder of the mortgage that is to be foreclosed at the time the Servicemembers complaint is filed.  Because this is an issue of subject matter jurisdiction, the trial judge is obligated to determine this whether or not it is raised by the defendant.  The SJC also held that only a homeowner who is on active military service has standing to file an answer in a Servicemembers case and that such a case cannot be used as a forum for non-military defendants to raise and litigate other issues.