In an “unpublished” decision (pdf) issued earlier this week (“unpublished” means the decision hasn’t been reviewed and issued by the full court), a three-judge Appeals Court panel reversed a lower court decision awarding possession of a foreclosed property to the foreclosing lender. The case, Novastar Mortgage, Inc. v. Elliot Saffran, involves a mortgage granted to Mortgage Electronic Registration Systems, Inc. (MERS) as nominee for the lender, Novastar Mortgage, Inc. In several recent cases involving MERS mortgages, Massachusetts courts have upheld foreclosures conducted by MERS itself (see related commentary here and here). However, in Novastar it was the lender – rather than MERS – that conducted the foreclosure, following which the lender filed a summary process (eviction) action against the mortgagor to gain possession of the property. The trial court found in favor of the lender but the Appeals Court panel – citing the Supreme Judicial Court’s Ibanez decision (see related commentary here) – reversed, ruling that the evidence was insufficient to show that the lender was the “holder” of the mortgage (by assignment from MERS) at the time the foreclosure was noticed and conducted. The panel stated:
We interpret the holding in Ibanez as placing the burden to present proof of an actual assignment on the entity, here Novastar, which is claiming the right to foreclose as an assignee. Therefore, the trial judge erred by requiring Saffran to demonstrate that Novastar was not the mortgage holder at the critical stages of the foreclosure process.”
The Appeals Court panel remanded the case to the trial court “for a new determination in light of the principles discussed in Ibanez.”