Breaking: SJC Rejects Major Challenge to Massachusetts Foreclosure Procedures

by Rich Vetstein on October 26, 2012 · 4 comments

in Foreclosure, Massachusetts Real Estate Law, Mortgage Crisis

Impact: Foreclosure Will Be Harder to Challenge

The Massachusetts Supreme Judicial Court’s (SJC) ruling in Federal National Mortgage Ass’n v. Hendricks just came down, and it’s good news for the foreclosure industry and bad news for distressed homeowners.

This case had the potential to change Massachusetts foreclosure practice, but the SJC rejected the challenge. The borrower, Oliver Hendricks, challenged the validity of the long-standing Massachusetts statutory form foreclosure affidavit which provided that the foreclosing lender has complied with the foreclosure laws. Rejecting the borrower’s claim that the affidavit was essentially robo-signed, the Court upheld the statutory form affidavit.

The case arose when Fannie Mae was attempting to evict Hendricks after the foreclosure. The court’s ruling provides that foreclosing lenders need only submit a valid foreclosure deed and statutory form affidavit during an eviction proceeding; the burden of proof then shifts to the borrower to come up with evidence of foreclosure irregularities. This has proven very difficult for distressed homeowners and their attorneys.

After this decision (and a recent Appeals Court ruling taking away a common eviction defense for post-eviction squatters), foreclosures and post-foreclosure evictions will be much harder to challenge. Also, we’ll likely see an acceleration of the pace of foreclosures, evictions of holdover borrowers, and a shrinking inventory of foreclosed and REO properties. Although distressed homeowners may be worse off, the overall real estate market stands to improve due to this ruling.

I’ll have more analysis later. The decision is embedded below. Also below is a video of the defendant, Olive Hendricks, speaking about his predicament produced by CityLife.

FNMA v. Hendricks

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  • Hendricks should not have much impact. When an affidavit of sale follows the statutory form, it is usually pretty easy to show that it is false. These affidavits are signed by someone in Florida, Texas or California saying that they sent the foreclosure notices to the homeowner. But the notices are sent from firms in Massachusetts or Rhode Island, which is evident from the face of the notice. Such an affidavit will establish a prima facie case under Hendricks, but the homeowner will survive summary judgment by rebutting it. The affidavit will not be admissible at trial because it does not meet the requirements of MGL c. 244 s. 15, which would require the robosigner to testify (falsely) at trial that she did the actions claimed.

    When the affidavit does not follow the statutory form – for example, by describing a third party’s actions – it is not controlled by Hendricks, and cannot be used to make a prima facie case, under MRCP 56 and HSBC v. Galebach.

    • Urito, I’m not so sure about that. Hendricks says that the affidavit is prima facie evidence, and then the burden shifts to the borrower to prove irregularities, or as you say “robo-signing.” The borrower will have to subpoena live testimony to establish same. We will see how this plays out….

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