“Novel Legal Theory” Succeeds in Challenging Bank’s Right to Foreclose in Case Brought by Culik Law

In a case brought by Culik Law against Bank of New York Mellon, challenging its right to foreclose, a federal judge of the U.S. District Court for Massachusetts has recognized what he called a “novel legal theory” and refused the bank’s request to dismiss the case.

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To foreclose on certain high-risk and predatory mortgages, Massachusetts law requires two things. First, it requires that the bank record an affidavit in the registry of deeds stating that it offered the homeowner the opportunity to apply for a loan modification. This is pursuant to Mass. General Laws chapter 244, section 35B. Second, there must be a power of attorney recorded in the registry of deeds for the person who signed the affidavit. This is pursuant to Mass. General Laws chapter 183, section 4 and section 32.

In this case, although the bank’s representative recorded the affidavit, it did not have a power of attorney recorded. Because of this, the homeowner challenged the bank’s right to foreclose.

In response, Bank of New York Mellon claimed that this argument was just a “distraction” and the case should be dismissed.

Rejecting the bank’s argument, the court held that the bank “failed to meet its burden of showing that such a novel claim is futile,” and that it “is plausible that [the bank] improperly recorded its power of attorney, stripping it of standing to foreclose.”

The homeowner is now permitted to proceed with his lawsuit against Bank of New York Mellon.

Culik Law represents Massachusetts homeowners in claims against banks, mortgage servicers, creditors, and debt collectors. Contact us to see if we can help you.

Josef Culik

Josef Culik

Attorney Joe Culik has built his reputation on helping people and has dedicated his practice in Boston, Massachusetts to consumer protection, employee rights, and small business and franchise law.