Wednesday, November 28, 2012

FYI: MA SJC Rejects Foreclosure Borrower's Challenge to Statutory Form Affidavit of Sale

The Massachusetts Supreme Judicial Court recently held that an affidavit of sale complying with the statutory form in a foreclosure action gave rise to prima facie evidence of a lender's right of possession, and in so ruling rejected a borrower's argument that the statutory form was out of date and inconsistent with the statutory framework for foreclosures in Massachusetts.  A copy of the opinion is attached. 
Foreclosure proceedings were instituted against a borrower in the name of Mortgage Electronic Registration Systems ("MERS").  MERS nominally proceeded to a foreclosure auction, where it tendered the highest bid.  It then assigned its bid to Fannie Mae, which acquired a foreclosure deed to the subject property.  Fannie Mae recorded that deed, as well an affidavit that matched the statutory form for an "Affidavit of Sale Under Power of Sale in Mortgage" (the "statutory form").  Fannie Mae then began an action of summary process against the borrower, and filed a motion for summary judgment which included copies of the recorded deed and statutory form. 
The borrower filed a cross motion for summary judgment, wherein he argued that the statutory form was legally deficient.  Specifically, the borrower argued that the statutory form recorded by FNMA was defective because it did not recite that FNMA had taken all acts necessary to comply with the controlling statute in Massachusetts. 
The lower court granted FNMA's motion for summary judgment, and the borrower appealed. 
The Massachusetts SJC began by scrutinizing the borrower's arguments, noting that he contended that the statutory form, which was established by the Massachusetts Legislature in 1912, was outdated.  Because the legislature had enacted an additional notice requirement to execute the power of sale, but had not amended the statutory form to reflect the new requirement, the borrower contended that the statutory form was inconsistent with the statutory scheme. 
The Court disagreed, finding "two obvious problems" with the borrower's argument.  First, the Court observed that the statutory form was never intended to reflect all of the actions taken by the entity executing the power of sale.  Specifically, although publication was required (and still is required) on three different dates, the statutory form included only one of those dates.  That is so, according to the Court, "because [the legislature] intended to shorten the length of instruments recorded with a registry of deeds..."  Therefore, the Court found "no reason to think that the failure to amend the statutory form...was a legislature oversight." 
Second, the Court again observed that the purpose of the statutory form was to shorten the documents to be recorded.  If affidavits of sale were required to be as "detail laden" as the statute itself, "there would have been no reason whatsoever even to create the statutory form." 
Accordingly, the Massachusetts SJC held that "in a summary process action a foreclosure deed and statutory form constitute prima facie evidence of the right of possession." 

Ralph T. Wutscher
McGinnis Wutscher LLP
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