In the Superior Court case Adamson v. MERS, the plaintiff foreclosed-on borrower is challenging the foreclosure on several grounds. The defendant mortgage lender and its loan servicer recently moved to dismiss the case, and in an interesting decision (pdf), Rackemann alum Judge Raymond Brassard allowed the motion to dismiss in part. Most interestingly, Judge Brassard addressed the plaintiff’s claim that the foreclosure was invalid because the note and mortgage were not held by the same person at the time of foreclosure. That issue is the subject of this previous post regarding Eaton v. Federal National Mortgage Association, in which the Supreme Judicial Court (SJC) recently heard oral argument.
Relying on the Superior Court decision in Eaton and on three SJC cases decided between 1860 and 1933 (all summarized nicely in his decision), Judge Brassard expressed concern that separating the mortgage from the note it secures could lead to double liability for the borrower (first, a foreclosure, then an attempt to collect the note). He ruled that a foreclosing mortgagee must “either hold the note or establish that it is acting at the behest of the note holder.” In a footnote to the quoted sentence, Judge Brassard observed that “the mortgagee could foreclose at the behest of the holder of the note in a fiduciary capacity and hold the foreclosure proceedings [sic] in trust for the note holder to collect.”
We’re eager to see whether the SJC agrees with Judge Brassard’s reasoning in Adamson when it decides the important Eaton case. If the SJC does follow this approach, borrowers will have a new arrow in their quiver to attack foreclosure sales arising from collateralized mortgages.