A copy of the opinion is available at:
Borrower also filed a complaint for injunctive and declaratory relief. In addition to filing a motion for a preliminary injunction as to the pending eviction, Borrower sought a declaration that the foreclosure sale and ensuing deed were null and void because the Servicer was not the holder of both the note and mortgage at the time of the foreclosure. For purposes of Borrower's motion for preliminary injunction only, Servicer and Loan Owner (collectively "Defendants") stipulated that Servicer did not hold Borrower's mortgage note at the time of the foreclosure sale.
Relying on common law, the trial court ruled that a valid foreclosure sale pursuant to a power of sale required physical unity of the mortgage and the underlying note in possession of the foreclosing mortgagee at the time of the sale. Thus, based partly on the stipulation that Servicer did not hold the note at the time of the foreclosure sale, the trial court granted the preliminary injunction, ruling that Borrower would likely succeed in proving that the sale was void and that Defendants had no authority to evict Borrower and take possession of the property.
Appeals ensued. After the Appeals Court denied Defendants' petition for interlocutory review, the Supreme Judicial Court transferred the case for direct appellate review to determine Borrower's likelihood of prevailing on the merits.
Importantly, however, the Massachusetts Supreme Judicial Court also ruled that a foreclosing mortgagee need not have physical possession of the mortgage note in order to conduct a valid foreclosure. Observing that there was no applicable statutory language prohibiting the application of agency principles within the context of mortgage foreclosure sales, the Court ruled that the authorized agent of the note holder, such as Servicer in this case, may therefore act as the "mortgagee" and conduct a valid foreclosure sale pursuant to a power of sale, even if the agent is not the actual note holder.
Turning back to Borrower's request for a preliminary injunction, the Court noted that because Borrower's allegations were based solely on "information and belief," Borrower had not provided an adequate factual basis for the granting of a preliminary injunction insofar as she had failed to establish that Servicer neither held the note nor acted on behalf of Loan Owner.
Ralph T. Wutscher
McGinnis Tessitore Wutscher LLP
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