The Supreme Judicial Court (SJC) recently issued another decision affecting the foreclosure of mortgages in Massachusetts.
In HSBC Bank USA, N.A., Trustee, v. Jodi B. Matt, No. 11101, slip op. (Mass. January 14, 2013), the SJC considered the issue of whether a lender, filing a complaint in the Land Court under the Servicemembers’ Civil Relief Act (SCRA) to determine if a borrower is entitled to the foreclosure protection under the SCRA, has standing to do so if the lender is not the holder of the mortgage and note (or acting on behalf of the note holder) at the time of filing the complaint, but merely holds a “right to purchase” the mortgage.
The SJC, hearing the case on its own motion, reversed the Land Court’s judgment in favor of the lender, and held that the lender did not establish standing in the SCRA proceeding. Relying heavily on its recent decision in Eaton v. Federal National Mortgage Association, 462 Mass. 569 (2012), the SJC held that, where “nonmortgagees are not, by law, in a position to foreclose on a mortgage, they could not suffer the loss that the servicemember proceeding redresses.”
Going forward, the Court, in a footnote, suggested that, to avoid calling into question a lender’s standing in a SCRA proceeding, a lender could file an affidavit pursuant to the Rules of the Land Court and G.L. c. 244, § 35A sufficient to establish the lender’s status as a mortgagee or the agent thereof. It remains to be seen, however, what evidence and documentation the Land Court will accept for this purpose.
Notwithstanding the Court’s overall ruling in favor of borrowers, the Court provided lenders with some relief as well. As part of its decision, the Court noted that, because the borrower was not entitled to protection under the SCRA, the Land Court should not have even heard the borrower’s motion to dismiss the SCRA action. The Court held that only those borrowers who are in the active military service and are therefore entitled to such protection have standing to challenge a lender’s complaint under the SCRA.
Ultimately, for those situations where a borrower may have the benefits of the SCRA, a lender should be able to demonstrate that the lender is the holder of the mortgage and note (or acting on behalf of the note holder) prior to filing its complaint to foreclose under the SCRA.