A recent Land Court Decision Affecting Foreclosures in Massachusetts

sgibbons · Joined: 06 Apr 2009 Posts: 3 1.66 Dollars($)

A recent Land Court decision that is currently a hot topic of discussion among conveyancers and underwriters in Massachusetts. Essentially, the court has invalidated any foreclosure sales where the mortgagee did not hold the mortgage via an unambiguous assignment dated prior to the date of sale. I have seen similar decisions coming out of bankruptcy courts, but this is the first time that a state court in Massachusetts has opened on this subject with such great detail. While most of New England states have judicial foreclosures, and the issue of the mortgagee's identity may be resolved by the court prior to the sale, I wanted to share this recent development in Massachusetts with you.
Does anyone have any information re: this change?

adonis · Posted: Fri Apr 10, 2009 12:00 am Post subject:

Thanks for sharing the news in the community sgibbons Smile

I didn't knew about this recent development.

Guest

A case decided in March 2009 by the Massachusetts Land Court invalidated two out of three Massachusetts foreclosure sales and questioned the validity of the Real Estate Bar Association's (REBA's) Title Standard No. 58 which addresses the issues raised with regard to mortgage assignments and mortgage discharges. The practice of including an effective date in the assignment which is prior to the date the assignment is executed is at issue. The rationale for the Land Court's decision is the concern that potential foreclosure bidders should be able to contact the foreclosure attorney to obtain proof of the foreclosing entity's interest in the mortgage. A motion to vacate the judgment in the Land Court decision was filed by one of the plaintiffs on April 2, 2009.

The decision, if applied retroactively to foreclosures that are in process and that have already been completed, would create problems with many titles where assignments were obtained subsequent to publication of foreclosure notices and the foreclosure sale. As a result, title insurance companies may refuse to insure titles to foreclosed properties where executed assignments were not in the hands of the foreclosure attorney prior to publication and sale. This action will cause delays in foreclosure timeline compliance as foreclosure attorneys wait for servicers to supply executed assignments. Moreover, there are potential future consequences such as case law or title insurance company action dictating that foreclosure complaints not be filed until the assignments are on record, further delaying the foreclosure process.

Guest

I was supposed to have a closing today and one hour prior to the scheduled time of the closing I was informed by the bank's attorney that we would not be closing as there was a problem regarding the new decision that was handed down by the Land Court regarding incorrect procedures during foreclosure that has to do with the assignments of the mortgages. Will this ever close? And why did it take the attorney so long to find this out? Shoudn't he have found this out early on when he should have began doing the title search? Not at the eleventh hour.

Guest

Marlene...it would be better if you could consult an attorney in this regard. By the way, you have mentioned that you had the closing today. Are you closing on a foreclosed property?

Guest

I am one of the buyers of the property Marlene wrote about. The property is a forclosure property. There appears to be a date when the forclosure process for this house will be reviewed (May 27). If everything is in order on the seller's end how long would it take to close? Worse case scenario is something is not in order then what are we (the buyers) up against? Our mortgage rate is locked in for now but how long before the bank says they can't hold that rate? Who would be the person we should be upset with that we were not made aware of this before the day of the closing?

jameshogg · Posted: Mon May 04, 2009 10:26 pm Post subject:

Hi Cheri,

You should note that it takes around 17 to 21 days to process the loan. It takes another 21 days to issue the loan documents. If something goes wrong, then the best person to consult will be your attorney. He will let you know what steps you need to take.

Thanks

Guest

...and I am the oher buyer. Since this was the FOURTH attempt at closing, wasn't the bank's attorney rather lax in waitng until that morning to do the title search?

Guest

I agree with you that the attorney was rather lax in doing the title search.

Guest

If the decision sticks, it's going to get messy. My fiance and I are (were?) also in the process of buying a foreclosure when this decision was made and it has already postponed the original closing date.

If the decision sticks, it could mean doing the foreclosure all over again which can take up to 3 months and in the meantime, if other parties want to buy the property - there's nothing to stop them. Since the seller could not produce a clean title, etc it makes the P&S void.

If the decision sticks, it needs to go to re-foreclosure and you end up losing the house because of it, I believe that you CAN sue the seller. This is coming from our lawyer - but because the case is so new and still being worked with, they might end up writing something in that protects sellers.

Guest

I am currently under agreement to purchase a foreclosed home and can not close due to this ridiculous decision that was passed. There is an appeal date of May 26th. This has to be affecting more good hard working people looking to purchase foreclosed properties other than my husband and myself. In anticipation of our purchase we had rented our home and are now living with my in-laws with our 2 year old daughter and 2 dogs! I have been told that it could take up to 2 years for this issue to get resolved in the state of Massachusetts. DOES ANYONE HAVE INFORMATION THAT COULD HELP ME??? Please let me know!

Guest

gmorin...it would be better if you could buy some other property and leave this one. In my opinion it would really take a long time to resolve the issue. If you go for some other property, you'll be able to close it faster.

Guest

I am in the same mess. I was supposed to close on April end, when my attorney found this out during his title search.. well, this court ruling came only on March 26th or so...

Anyway, I did some research on the deeds website and I figured out the original foreclosure was done by a law office in Woburn. I called them up to see if they know anything about this property and if they could do anything. She said the foreclosed bank may have the original note and when recorded the correct one, that could resolve my issue. She has asked for that from the bank, but its been 3 weeks and still waiting. But I am hoping once that doc comes, there would be some positive news. If my problem could go away with that, that would be golden. If I have to wait for the court decision, my attorney warned that I may be in for a long wiat and would be better of looking at other proeprties..
my fingers crossed for may 27th ruling. I hear, judge has to come up with a way of aloowing the sale of houses that were foreclosed in the past and rule to follow the correct procedures for the future foreclosures...

We are frustrated at not able to move in to the house we loved. I feel your pain.

Guest

Does anyone know where I can get info on the May 27th hearing venue for previously foreclosed properties and how to correct an untimely mortgage assignment? I have a real estate attorney, but I also have paralegals and attorneys in my office. One paralegal said they might be able to hook me up with a live webcam feed if I knew what court the hearing is held in...if it is an appeals court...or some other major courthouse which has been equipped to stream a live feed...I'm sure there will be plenty of interest in this decision...

Just another Guy and his Gal waiting on a dream property after saving for a rainy day and not being able to spend a dime during a monsoon.

Thanks

Guest

We're in the same situation. I found out about a week ago during the title search and we were supposed to close today. It seems my realtor and the REO agent are not being very forthcoming about the situation.

I'm not sure how long we should end up waiting for the property. Today I heard on the news that REO properities account for 1 in 12 sales. I wonder if the sheer number of possible stalled sales could help to resolve this mess

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