The foreclosure process for a residential mortgage loan can seem daunting, but the borrower may have defenses against foreclosure. In a May 11, 2018 Massachusetts foreclosure action, the Appeals Court of Massachusetts found in favor of a homeowner fighting against foreclosure. Ultimately, the court reversed the judgment of the lower court and allowed the plaintiff to continue her defense in the proceedings.
The facts of the case are not unusual in foreclosure actions. The plaintiff signed the original note payable to the bank in 2007. A few months later, Fannie Mae purchased a pool of loans from the bank, including the plaintiff’s loan. After the plaintiff defaulted, the bank sent her a right to cure notice. In 2009, a mortgage loan servicer for Fannie Mae foreclosed on the plaintiff’s home, exercising the power of sale contained in her mortgage. The servicer, acting for Fannie Mae, offered the highest bid at the auction. Fannie Mae purchased the property and then brought an eviction action against the plaintiff in Housing Court. The plaintiff brought her own action and obtained a preliminary injunction against the eviction, on the basis that the servicer did not hold the mortgage note at the time of the foreclosure sale. On remand, however, the court entered judgment in favor of Fannie Mae and the loan servicer. The plaintiff appealed the judgment in the case.
On appeal, the plaintiff presented three arguments for reversal, two of which pertained to the requirements of the right to cure notice. The provision at issue required the notice to specify the default, the action required to cure the default, a date no earlier than 30 days of the notice by which the default must be cured, and a statement that a failure to cure the default on or before that date may result in acceleration. The provision also required that the notice must inform the borrower of her right to reinstate after acceleration, and her right to bring a court action to assert any defenses to acceleration and sale.