{"id":1360,"date":"2012-04-04T13:03:00","date_gmt":"2012-04-04T13:03:00","guid":{"rendered":"https:\/\/www.sherin.com\/real-estate\/2012\/04\/04\/the-eaton-foreclosure-case-addressing-a-problem-that-doesnt-exist\/"},"modified":"2023-11-08T18:38:06","modified_gmt":"2023-11-08T18:38:06","slug":"the-eaton-foreclosure-case-addressing-a-problem-that-doesnt-exist","status":"publish","type":"post","link":"https:\/\/www.sherin.com\/real-estate\/2012\/04\/04\/the-eaton-foreclosure-case-addressing-a-problem-that-doesnt-exist\/","title":{"rendered":"The Eaton Foreclosure Case: Addressing A Problem That Doesn\u2019t Exist"},"content":{"rendered":"

The case of Eaton v. Federal National Mortgage Association<\/em><\/a>, which is currently pending before the SJC, addresses the issue of whether a mortgage foreclosure is invalid because the foreclosing mortgagee did not possess the promissory note at the time of foreclosure.\u00a0 The Superior Court judge in this case ruled the foreclosure invalid for this very reason.\u00a0 While conceding that Massachusetts common law has recognized that the note and mortgage can be separately assigned, the judge concluded that the two instruments must be reunited to effectively foreclose the mortgage.<\/p>\n

The only argument for demanding unity of the note and mortgage is the theoretical possibility that a mortgage holder can foreclose on a debtor\u2019s property and the actual note holder can subsequently make an independent claim for the same debt evidenced by the note.\u00a0 Proponents of the unity theory overlook the fact that no such claim has arisen or occurred in Massachusetts.\u00a0 And in today\u2019s modern lending market, it is inconceivable that a foreclosing mortgagee is not acting at the direction of the note holder or the note holder\u2019s servicing agent.<\/p>\n

In the Eaton<\/em> case, the actual holder of the note was FNMA<\/a>, but the foreclosing mortgagee was Green Tree Servicing, LLC<\/a>, which was acting as servicer for FNMA.\u00a0 Why any court would be concerned that FNMA would seek to enforce the debt owed by Eaton independently of the foreclosure by its servicer defies comprehension.<\/p>\n

However, if the SJC upholds the lower court\u2019s ruling and concludes that its holding applies retroactively, every real estate title in Massachusetts that has a foreclosure in its back title will become unmarketable because there is no way for anyone examining record title to determine if a foreclosing mortgagee possessed the note at the time of foreclosure.<\/p>\n

Massachusetts law does require that assignments of mortgages be recorded, but there is no such requirement regarding the transfer of notes.\u00a0 In fact, in a lending environment with a secondary mortgage market, securitized loans, and the Mortgage Electronics Registration System<\/a> (\u201cMERS\u201d), it is almost impossible to determine from an examination of title to a specific property who holds the note secured by a recorded mortgage.<\/p>\n

And so the real estate industry nervously anticipates the SJC decision: Will the Superior Court ruling be upheld on a retroactive basis, bringing chaos and paralysis to the industry (not only in Massachusetts but across the country)?\u00a0 Will the Court overrule the lower court decision and reject the proposition of unity of the note and mortgage?\u00a0 Or will the Court adopt the proposition but only apply it prospectively?<\/p>\n

The real estate industry awaits an outcome that is beyond its control \u2013 all because the courts have decided to address a problem that doesn\u2019t exist and that doesn\u2019t need fixing.<\/p>\n","protected":false},"excerpt":{"rendered":"

The case of Eaton v. Federal National Mortgage Association, which is currently pending before the SJC, addresses the issue of whether a mortgage foreclosure is invalid because the foreclosing mortgagee did not possess the promissory note at the time of foreclosure.\u00a0 The Superior Court judge in this case ruled the foreclosure invalid for this very […]<\/p>\n","protected":false},"author":1,"featured_media":5600,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[],"tags":[],"class_list":["post-1360","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"acf":[],"yoast_head":"\nThe Eaton Foreclosure Case: Addressing A Problem That Doesn\u2019t Exist - Real Estate<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.sherin.com\/real-estate\/2012\/04\/04\/the-eaton-foreclosure-case-addressing-a-problem-that-doesnt-exist\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Eaton Foreclosure Case: Addressing A Problem That Doesn\u2019t Exist - Real Estate\" \/>\n<meta property=\"og:description\" content=\"The case of Eaton v. Federal National Mortgage Association, which is currently pending before the SJC, addresses the issue of whether a mortgage foreclosure is invalid because the foreclosing mortgagee did not possess the promissory note at the time of foreclosure.\u00a0 The Superior Court judge in this case ruled the foreclosure invalid for this very […]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.sherin.com\/real-estate\/2012\/04\/04\/the-eaton-foreclosure-case-addressing-a-problem-that-doesnt-exist\/\" \/>\n<meta property=\"og:site_name\" content=\"Real Estate\" \/>\n<meta property=\"article:published_time\" content=\"2012-04-04T13:03:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-11-08T18:38:06+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.sherin.com\/real-estate\/wp-content\/uploads\/sites\/2\/2012\/04\/foreclosure-notice.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"850\" \/>\n\t<meta property=\"og:image:height\" content=\"563\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Sherin and Lodgen\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Sherin and Lodgen\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.sherin.com\\\/real-estate\\\/2012\\\/04\\\/04\\\/the-eaton-foreclosure-case-addressing-a-problem-that-doesnt-exist\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.sherin.com\\\/real-estate\\\/2012\\\/04\\\/04\\\/the-eaton-foreclosure-case-addressing-a-problem-that-doesnt-exist\\\/\"},\"author\":{\"name\":\"Sherin and Lodgen\",\"@id\":\"https:\\\/\\\/www.sherin.com\\\/real-estate\\\/#\\\/schema\\\/person\\\/d3993443b0c28a6cbc428e4c8cf2503b\"},\"headline\":\"The Eaton Foreclosure Case: Addressing A Problem That Doesn\u2019t Exist\",\"datePublished\":\"2012-04-04T13:03:00+00:00\",\"dateModified\":\"2023-11-08T18:38:06+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.sherin.com\\\/real-estate\\\/2012\\\/04\\\/04\\\/the-eaton-foreclosure-case-addressing-a-problem-that-doesnt-exist\\\/\"},\"wordCount\":470,\"commentCount\":0,\"image\":{\"@id\":\"https:\\\/\\\/www.sherin.com\\\/real-estate\\\/2012\\\/04\\\/04\\\/the-eaton-foreclosure-case-addressing-a-problem-that-doesnt-exist\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.sherin.com\\\/real-estate\\\/wp-content\\\/uploads\\\/sites\\\/2\\\/2012\\\/04\\\/foreclosure-notice.jpg\",\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.sherin.com\\\/real-estate\\\/2012\\\/04\\\/04\\\/the-eaton-foreclosure-case-addressing-a-problem-that-doesnt-exist\\\/\",\"url\":\"https:\\\/\\\/www.sherin.com\\\/real-estate\\\/2012\\\/04\\\/04\\\/the-eaton-foreclosure-case-addressing-a-problem-that-doesnt-exist\\\/\",\"name\":\"The Eaton Foreclosure Case: Addressing A Problem That Doesn\u2019t Exist - 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