Massachusetts Court Reverses Ruling On State Foreclosure Procedures

The Massachusetts Supreme Judicial Court has ruled that foreclosure sales in the state are valid even if the foreclosing entity does not hold the mortgage note.

According to combined media reports, this ruling reverses a lower-court decision by declaring that a foreclosing party acting on behalf of a note holder is not required to physically possess the mortgage note. The case involves Henrietta Eaton, a suburban Boston homeowner who claimed the foreclosure on her residence was illegal because the servicer, Green Tree Servicing LLC, did not hold the mortgage note; Green Tree was the highest bidder in a 2009 foreclosure auction on Eaton's home, and the company later transferred the property to Fannie Mae.

In its ruling, the Supreme Judicial Court agreed with Eaton's argument that state law requires foreclosing entities to possess both the mortgage itself and the promissory note before foreclosure. However, the court added this ruling applies only to future foreclosures and cannot be enacted retroactively.


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