It is not uncommon for mortgage lenders to assign or transfer their original loan to another financial institution, although it may be confusing to borrowers. For homeowners involved in a mortgage dispute, guidance from a Massachusetts real estate attorney can alleviate the complexity regarding their rights against each bank. In a March 15, 2018 case before the Appeals Court of Massachusetts, an improperly documented mortgage was the subject of a declaratory judgment sought by the plaintiff, as an agent of a bank, against the homeowners.
The first mortgage on the defendants’ property was initially obtained in 2000. In 2001, they refinanced that loan. To do so, one of the defendants executed another mortgage with a second bank in order to satisfy and discharge the original mortgage. Shortly thereafter, the second bank executed a blank assignment of the new mortgage and loan, which was subsequently altered to fill in the name of yet another bank, the assignee.
The plaintiff in the case was appointed as the servicer of the assignee bank’s mortgage loans in 2002, including the defendants’ mortgage, which was listed in a schedule with a pool of other loans assigned to the plaintiff. In 2003, the defendants stopped making payments on their mortgage, and the plaintiff commenced an action against them in 2007. In order to proceed, the plaintiff needed a declaratory judgment that the improperly documented mortgage was equitably subrogated to the prior first mortgage. Several issues in the case were decided, appealed, and remanded before again returning to the Appeals Court of Massachusetts in 2018.