Adam Levitin | Eaton v. Fannie Mae Analysis

Eaton v. Fannie Mae Analysis

The Massachusetts Supreme Judicial Court finally issued its long-awaited ruling in Eaton v. Fannie Mae. This case involved the question of whether a “naked mortgagee”–a mortgagee that was not also the holder of the promissory note–had standing to foreclose. (Full disclosure: I submitted a pair of amicus briefs in the case arguing that foreclosure required the mortgage and the note to be united.)

The SJC held that in Massachusetts a foreclosing party must have both the mortgage and the note or be acting on behalf of a party with the note. Critically, however, the SJC restricted the ruling to a prospective application. That means that past foreclosures cannot be reopened because of this case, so the financial services industry just dodged billions in liability for wrongful foreclosures and evictions, and the title insurance industry did as well. (Note that Massachusetts has a public option title insurer–a Torrens system of land registration that covers perhaps a third of the properties in the state. If the whole state were covered, there’d be no problem.)

In the immediate term, I’d score the case as a major victory for the financial services industry, which avoided liability for its failure to comply with state law foreclosure requirements. Going forward, however, things are more complicated.

Post-Eaton it is clear that in Massachusetts if one wants to foreclose one must have both the note and mortgage.

Rest here…

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4closureFraud.org

Comments
3 Responses to “Adam Levitin | Eaton v. Fannie Mae Analysis”
  1. Tim Bryant says:

    Since it is not retroactive, what effect will that have on foreclosing parties who were tossed out and have to refile?

  2. Tim Bryant says:

    The legal nonsense used by the justices is disturbing. they claim an assignee can foreclose on behalf of the noteholder. The justices also mention that the actual noteholder was unknown. It does not follow, that an assignee can foreclose on behalf of the noteholder, without establishing who the noteholder is, and the document giving that authority. There is no “assignee”, without a noteholder. Basic agency principles, which they left out for whatever reason.

    The definitions they created, about who a noteholder, mortgagee, and assignee are, will come back to bite them on the a$$. A MERS mortgage clearly states that if the mortgage is sold, the seller will treated as a “co-borrower”. You could potentially have a foreclosing entity who is also responsible for the mortgage satisfaction. That is because they sold the mortgage to God knows who, and the judges fail to read the ENTIRE MERS mortgage. They tend to just focus on what MERS claims they are, instead of looking at what they really are, what they claim they can do in the mortgage, what they legally can do in the mortgage, and all the other covenants stated in the mortgage.

    That has to be compared to the PSA, which further defines what the players can, and can’t do under it’s terms. judges need to review all equitable principals, especially when a borrower does not have the means to be represented. They are the “goal line defense” to prevent injustice.

    • Faith says:

      Do you think they looked at the numbers of people and money affected by the outcome of this decision and based it on the greater number of those affected?

      Numbers of us in foreclosure vs. those with $$$$$ in the business or invested in Real Estate? Title Ins. Mortgage brokers, Realtors all that might have faced suits along with the recent buyers of foreclosures.

      Surely us deadbeats are not worth as much and we are fewer in numbers .

      Should I pack my bags?

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