Attorneys May Conduct Foreclosure, but Homeowners Can Defend Based on Unfair Practices, Says Massachusetts Supreme Judicial Court
A new decision from the Massachusetts Supreme Judicial Court has clarified when an attorney may handle a foreclosure on behalf of a bank, holding that attorneys need not have written authorization in order to do so.
The case, Fannie Mae v. Rego, was the appeal of an eviction case. Fannie Mae filed an eviction case against the Massachusetts homeowners (called a “summary process” case). The homeowners argued that the sale was void because the bank’s attorneys had not been authorized in writing to foreclose.
Under the Massachusetts foreclosure law, an attorney may handle foreclosures if “authorized in writing under seal.” The applicable statute is Massachusetts General Laws, chapter 244, section 14.
The Massachusetts Supreme Court rejected this argument, holding that attorneys for banks may conduct foreclosures even if there is no writing because the statute’s use of the word “attorney” meant someone with a power of attorney, not a lawyer.
The decision also affirms the right of homeowners in eviction cases to bring defenses based on inequitable conduct related to the foreclosure by the bank or mortgage servicer. These claims may include defenses based on loan modification negotiations, invalid foreclosure documentation, or other unfair and deceptive practices, such as those prohibited under the Massachusetts Consumer Protection Act, called Chapter 93A.
The decision is another clarification of what is required for banks to properly foreclose under Massachusetts law. Although it cuts off one defense, it also ensures that homeowners can bring counterclaims, even after a foreclosure, when the bank has acted inequitably.
The case is here: Fannie Mae v. Rego
Culik Law is a Massachusetts consumer protection law firm who handles wrongful-foreclosure and loan-modification-related claims. If you have been experiencing mortgage issues, are facing a foreclosure, or are struggling to obtain a loan modification, contact us to see if we can help.