The Massachusetts Supreme Judicial Court released their long-awaited Eaton v. Fannie Mae decision on June 22, 2012. For months now, former homeowners and their attorneys anxiously awaited the SJC’s final decision and remarks on whether a foreclosing entity requires possession of both the mortgage and note. The Court held that moving forward, Banks and foreclosing entities require possession of both the mortgage and the note in order to properly transfer title and foreclose. While it helps homeowners in the future, this may leave anyone who faced foreclosure prior to decision in a lurch because this new case law is not retroactive.
The specific holding for the case reads:
“For the reasons we discuss herein, we conclude as follows. A foreclosure sale conducted pursuant to a power of sale in a mortgage must comply with all applicable statutory provisions, including in particular G. L. c. 183, § 21, and G. L. c. 244, § 14. These statutes authorize a “mortgagee” to foreclose by sale pursuant to a power of sale in the mortgage, and require the “mortgagee” to provide notice and take other steps in connection with the sale. The meaning of the term “mortgagee” as used in the statutes is not free from ambiguity, but we now construe the term to refer to the person or entity then holding the mortgage and also either holding the mortgage note or acting on behalf of the note holder. Further, we exercise our discretion to treat the construction announced in this decision as a new interpretation of the relevant statute, only to apply to foreclosures under the power of sale where statutory notice is provided after the date of this decision. We vacate the preliminary injunction and remand the case to the Superior Court for further proceedings consistent with this opinion.”