Pinti v. Emigrant Mortgage Co., Inc.
472 Mass. 226
| Mass. | 2015Background
- Phillips and Pinti (mortgagors) granted a mortgage to Emigrant in 2008 containing a standard-form Paragraph 22 requiring a pre-acceleration notice specifying default, cure steps, a 30+ day cure period, and that borrower has the right to bring a court action to assert defenses.
- Plaintiffs missed payments in 2009; Emigrant sent a September 29, 2009 notice that misstated the Paragraph 22 language: it said borrowers “have the right to assert in any lawsuit for foreclosure” (suggesting response only in a lender-filed suit).
- Emigrant published a foreclosure sale in 2012; Wilion purchased the property at auction and received a foreclosure deed. Wilion then sought possession by summary process.
- Plaintiffs sued, seeking a declaration that the sale was void for failure to strictly comply with Paragraph 22 and alternatively alleging Emigrant lacked authority to foreclose because of prior assignment. The trial court granted summary judgment to Wilion and dismissed plaintiffs’ complaint.
- The Supreme Judicial Court reversed: it held Paragraph 22 is a term of the mortgage integral to the power of sale, required strict compliance, Emigrant’s notice failed that test, and the defective notice rendered the foreclosure sale void. The Court applied its ruling prospectively but to the parties before it.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether strict compliance with Paragraph 22 notice is a condition of a valid nonjudicial foreclosure sale | Paragraph 22 is a term of the mortgage and its pre-acceleration notice is a condition precedent to exercising the power of sale; strict compliance required | Paragraph 22 is like G. L. c. 244, § 35A — not part of the power-of-sale mechanics; only substantial compliance required | Held: Paragraph 22 is a mortgage term integrally connected to the power of sale; strict compliance is required |
| Whether Emigrant’s September 29, 2009 notice satisfied Paragraph 22 | Notice failed to inform mortgagors they must bring a court action to assert defenses (misstated wording) | Notice substantially complied and was adequate | Held: Notice did not strictly comply with Paragraph 22 and was deficient |
| Legal effect of the defective notice — void vs. voidable sale | Defect is not a mere irregularity given risk mortgagors would be misled about need to sue; sale is void | Defect is like § 35A defects in Schumacher — renders sale voidable, not void; protects bona fide purchasers | Held: Defect rendered the foreclosure sale void (not merely voidable) in these parties’ case |
| Remedy and temporal effect | Plaintiffs sought relief as to title and summary process; risk to third-party purchasers noted | Defendants raised disruption to title chains and argued for limiting rule | Held: Ruling applied prospectively to future sales (and to present parties); court suggested recording an affidavit of compliance going forward |
Key Cases Cited
- U.S. Bank Nat’l Ass’n v. Ibanez, 458 Mass. 637 (reaffirms rule that one exercising a power of sale must follow its terms strictly)
- U.S. Bank Nat’l Ass’n v. Schumacher, 467 Mass. 421 (statutory pre-acceleration notice under G. L. c. 244, § 35A, is not part of the statutes governing the mechanics of a power-of-sale foreclosure)
- Eaton v. Federal Nat’l Mortg. Ass’n, 462 Mass. 569 (discusses assignment/authority issues and foreclosure statutes)
- Moore v. Dick, 187 Mass. 207 (classic statement that failure to follow terms of a power of sale renders sale void)
- Foster, Hall & Adams Co. v. Sayles, 213 Mass. 319 (failure to give required pre-foreclosure notice raises reasonable doubt as to title)
- Bevilacqua v. Rodriguez, 460 Mass. 762 (distinguishes void vs. voidable sales and bona fide purchaser protection)
- Rogers v. Barnes, 169 Mass. 179 (conditions precedent to power of sale must be strictly complied with)
- Chace v. Morse, 189 Mass. 559 (discusses void vs. voidable distinctions in power-of-sale context)
- Smith v. Provin, 4 Allen 516 (early case treating conditions precedent to power of sale)
- McGreevey v. Charlestown Five Cents Sav. Bank, 294 Mass. 480 (mortgage terms prescribing sale location required strict compliance)