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Showing 3 posts in 1st Circuit Court of Appeals.

First Circuit Reverses Course in Closely-Watched Pre-Foreclosure Notice Decision, Defers to Massachusetts Supreme Judicial Court

Earlier this year, Hinshaw reported on a decision by the First Circuit Court of Appeals which invalidated a Massachusetts foreclosure based on the Court's determination that the mortgage loan servicer's notice of default included additional language which did not strictly comply with Paragraph 22 of the mortgage. In the wake of that decision, the servicer filed a petition for rehearing on several grounds, but primarily because the Code of Massachusetts Regulations required use of what the Court had characterized as additional language. The banking community also filed several amicus briefs in support of Chase's petition. More ›

First Circuit Concludes that "Potentially Deceptive" Language Added to Default Notice May Void Foreclosure Sale in Massachusetts

In Thompson v. JPMorgan Chase Bank, the First Circuit Court of Appeals held a foreclosure was potentially void where terms in the lender's default notice arguably conflicted with terms in Paragraph 19 of the Mortgage. Although Chase's notice of default provided the Thompsons with the disclosures required under Paragraph 22 of the Mortgage, Chase's default notice further stated that the Thompsons "could still avoid foreclosure by paying the total past-due amount before a foreclosure sale takes place." The First Circuit interpreted this additional language as potentially misleading, because advising borrowers that they could make payment up to the time of the foreclosure sale differed from the Mortgage's Paragraph 19, which only allowed a reinstatement payment five days before the sale of the Property. More ›

Mortgages or milk - do you need to check your expiration date?

There are borrowers out there who believe that the Massachusetts Obsolete Mortgage Statute, M.G.L. c. 260 sec. 33, relieves them of their repayment obligations. This statute, amended back in 2006, provides that five years after a mortgage reaches its term (or 35 years after the time the mortgage is recorded where a maturity date is not specified) it will be discharged by operation of law absent the timely recording of an extension or affidavit. The 2006 amendment specifically applied to all existing mortgages. The law is supposed to provide clarity in conveyancing and protect borrowers if their mortgagee or servicer failed to issue a discharge of the mortgage after the mortgage reaches its term.

In Hayden v. HSBC Mortgage, the borrowers alleged that the statute should apply to their loan and the loan should be discharged by operation of law because five years had passed from the time the servicer had accelerated the loan. Mortgagees and servicers can rest easy, however, because the First Circuit rejected this theory outright. In a succinct and emphatic rejection, the court held that "[n]othing in the text of the statute supports the Haydens' assertion that the acceleration of the maturity date of a note affects the five-year limitations period for the related mortgage." Thus, a borrower's milk will undoubtedly expire well before his mortgage.

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