Foreclosures & Workouts Update 2016 Katherine Prifti, Esq. Underwriting Counsel

Pinti vs. Emigrant Mortgage Notice has to “strictly comply” with Paragraph 22 of the mortgage. The Supreme Judicial Court ruled that a lender’s defective notice of default was grounds to void a foreclosure sale. The notice has to say that the borrower had the right to initiate court action to challenge the default or foreclosure.

Bank of America, NA. vs. Debora A. Casey Supreme Judicial Court rules that the attorney 5B affidavit could correct material defects in certificate of acknowledgement. Supreme Judicial Court also ruled that the attorney affidavit could provide constructive notice of the mortgage to a bona fide purchaser;

Paiva v. Bank of New York Mellon General Law c. 244, section 15A, requires foreclosing banks to notify tax authorities within 30 days of conveying title District Court held that failure to comply with this post foreclosure statutory provision does affect the validity of the foreclosure sale

Foreclosure 2015 New Legis-lation Paiva Pinti 2012 Eaton 2011 Bevil-acqua Ibanez - SJC 2009 Ibanez Pre-2009 The world we knew

Statutory Laws Non-Judicial Foreclosure Statutory Framework The beginning Non-Judicial Foreclosure Statutory Law Governing Typical Manner of Foreclosures in Massachusetts is: MGL Chapter 244 MGL Chapter 244 Sec. 1: Foreclosure by Entry MGL Chapter 244 Sec. 14: Foreclosure under Power of Sale

Servicemembers Complaint Complaint list the plaintiff as the original record mortgagee or holder by merger. Complaint names correct defendant Complaint reference correct property address Reference original mortgagee Date of Judgment or pro confesso pre-date the auction date.

Case Law U.S. Bank National Association v. Ibanez Sale Entry The Beginning Ibanez 2009 Ibanez - SJC 2011 U.S. Bank National Association v. Ibanez Issue: Back Dated assignments Fallout: Common practice SJC upholds decision Applies Retroactively …

Compliance with Ibanez - Requirement Was the assignment into the foreclosing entity signed before the first publication?

Case Law Sale Entry The Beginning Ibanez 2009 Ibanez – SJC Bevil-acqua 2011 Eaton 2012 Eaton v. Federal National Mortgage Association, 462 Mass. 569 (2012) Issue: Foreclosure challenge relating to note-holder status SJC holds: foreclosing mortgagee must “hold” the note or must be agent of note holder Fallout: Note is off-record

Compliance with Eaton - Requirement So-called “Eaton Affidavit” Purpose: Establish that the foreclosing lender is the holder of the note at the time the foreclosure commenced or that it was the authorized agent of the note holder. Note: Eaton applies to both Residential & Commercial foreclosures

Compliance with Eaton - Requirement First publication between June 22, 2012 and October 31, 2012, Eaton Affidavit required. Form is a proper MGL c. 183 Sec. 5B. Subscribed and sworn to under the pains and penalties of perjury with a proper jurat. Recite that it is based on the review of note holder’s records and the foreclosing mortgagee is the holder of the note or agent of the holder of the note.

New Legislation Sale Entry The Beginning Ibanez 2009 Ibanez – SJC Bevil-acqua 2011 Eaton Legislation 2012 The Act Preventing Unlawful and Unnecessary Foreclosures Effective November 1, 2012 The Act Amends MGL 244 Sec. 14 Requires: All assignment be recorded prior to first publication

New Legislation Sale Entry The Beginning Ibanez 2009 Ibanez – SJC Bevil-acqua 2011 Eaton New Legislation 2012 The Act Preventing Unlawful and Unnecessary Foreclosures Effective November 1, 2012 The Act Added Section 35B and 35C to Chapter 244 of the Massachusetts General Laws.

Acts The Act Preventing Unlawful and Unnecessary Foreclosures Added Section 35B and 35C to Chapter 244 of the Massachusetts General Laws. For this purpose, in circumstances where there is a foreclosure of a 1-4 family, owner-occupied, residential mortgage, affidavits of compliance with the new statues are required.

Compliance with 35B & 35C 35B affidavit indicating compliance or non-applicability – dated prior to the first publication (applies only to “certain loans”) Purpose: creditor has offered mortgagor means to avoid foreclosure 35C affidavit – codified Eaton for “certain loans”

Compliance with 35B & 35C First publication date on or after November 1, 2012 Is it a one to four family, owner occupied, residential property. Then MGL 244 Sec 35B and 35C affidavits are required. Affidavit has to be subscribed and sworn to under the pains and penalties of perjury with a proper jurat. Executed prior to the first publication. Recite that its based on the review of the creditors records and foreclosing mortgagee is the note holder.

Entry Entry made by mortgagee’s representative with authority to make entry. Does entry list correct mortgageor, mortgagee and mortgage information. Entry states that the mortgagee made an open, peaceable and unopposed entry on the land, for the purposes of foreclosing the mortgage for breach of the conditions thereof. Entry has to be witnessed by two disinterested witnesses Entry has to have a jurat by a disinterested notary with a valid commission.

Case Law An Act Clearing Title to Foreclosed Properties Sale Entry The Beginning Ibanez 2009 Ibanez – SJC Bevilacqua 2011 Eaton New Legislation 2012 Pinti Paiva Act Clearing Title to FCL prop 2015 An Act Clearing Title to Foreclosed Properties Effective: December 31, 2016 Response to: Ibanez … back in 2009

Foreclosure Deed and Affidavit Grantor has to be the current mortgage holder on record and party who conducted foreclosure. Foreclosing mortgagee the holder of record as of the first publication date. Consideration on the deed match the consideration stated in the affidavit. Grantee the highest bidder or the assignee thereof and that is stated in the affidavit. Party executing foreclosure deed have authority to do so (MGL 183 Sec. 54B) Document property acknowledged Foreclosure affidavit under oath by an individual

Foreclosure Deed and Affidavit Mortgagee’s sale of Real Estate notice published for three consecutive weeks, the first publication being at least 21 days before the published sale date? Do the dates in the publication match the affidavit? Mortgagees Sale of Real Estate notice published in a newspaper having general circulation in the town of the property being foreclosed. Property description in mortgage match that of the publication. Affidavit has to state that it complied with MGL 244 section 14. Sale date and time in the publication match that of the affidavit. Affidavit has to list the name of the auctioneer and indicate that the auctioneer is duly licensed. Affidavit mention that the property was sold to the highest bidder which has to be the grantee on the foreclosure deed.

In order to insure the property has to be vacant. Off-Record Evidence Check the Bankruptcy Records. If the borrower is in Bankruptcy is there Relief of Stay so the mortgagee can proceed with the foreclosure. Review green cards to ensure that all junior lien holders received notice. Make sure notice is provided to the owners at the proper address. Is notice timely? Notice was mailed 14 days prior to the published sale date to owners of the equity of redemption and all junior lien holders appearing of record 30 days prior to the published sales date. In order to insure the property has to be vacant.