SJC Rules that Failure to Send a Postforeclosure Notice Does Not Invalidate A Foreclosure

The Supreme Judicial Court issued a decision this week on postforeclosure notices, and whether the failure to send one invalidates a foreclosure sale.  In Turra v. Deutsche Bank, the Court ruled that the failure to send one of these notices does not void a foreclosure (disclosure: this was my appeal!).  A full copy of the decision is below.

The law in question, G.L. c. 244, § 15A, requires a mortgagee to notify the local municipalities of a foreclosure thirty days after the sale has occurred.  As the Court acknowledged in Turra,  prior court decisions suggested that strict compliance with this law was required to perform a lawful foreclosure.  The question in Turra was whether this was such a requirement, and whether a failure to comply with this step would invalidate a foreclosure.  Turra determined this statute isn’t grounds for challenging foreclosures.

I don’t read Turra to suggest that a failure to comply with a postforeclosure notice requirement can never be used to challenge a foreclosure.  If a homeowner or someone else is actually harmed from a bank’s failure to send such a notice, this violation may potentially be a consumer protection claim.  Turra is clear, however, that such a violation, on its own, is not enough to be a foreclosure defense.

While Turra wasn’t the outcome I wanted, I’m pleased that the Supreme Judicial Court acknowledged the basis for my argument, and conceded  that its prior caselaw suggested this was a plausible defense.  The decision mentions two other decisions where courts came out the oppositie way on this question of law (one of these decisions was one of my other cases using this defense).  You can’t win ’em all!

Turra has an important lesson of wisely choosing a foreclosure defense strategy.  The Internet is filled with foreclosure defense hoaxes and myths that do struggling homeowners more harm than good in trying to save their homes.  A review of unsuccessful foreclosure defense cases in state and federal court shows dozens of cases lost on the same arguments that courts routinely reject.  My strategy in defending homeowners is to make arguments that have a basis in law, and reject arguments that don’t work.  I reject the “kitchen sink” approach to foreclosure defense, where one raises every argument they can think of, irrespective of whether the claim has any hope of succeeding.  It is far better, in my opinion, to stick with arguments that work, and try new approaches.   While not successful in this case, my legal argument on these postforeclosure notices succeeded in several of my other cases, and helped keep a deserving family in their home.  If you find yourself facing foreclosure, don’t rely on an Internet myth to defend yourself: contact an experienced attorney for assistance.

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What is Housing Court in Massachusetts?

Massachusetts has a unique forum for resolving matters involving residential housing: Housing Court.  Understanding what is housing court is essential for landlords, tenants, and former homeowners facing an eviction after foreclosure, as Housing Court is a popular forum for resolving these disputes.

Housing Court is a specialty court for matters involving residential housing.  Evictions makeup the bulk of the cases filed in these courts, but Housing Court can also hear civil lawsuits, criminal cases, and small claim matters (if they concern housing).  A party may file their case directly in Housing Court.  Alternatively,  a party may transfer their case into Housing Court so long as this is done the day before trial.  A transfer to housing court is a simple matter that only requires a party to file a notice of transfer in the court where the case was originally filed, and the appropriate Housing Court.  This is commonly done for eviction cases filed in District Court, where the tenant wishes the matter to be heard in the appropriate Housing Court.

Housing Court isn’t available everywhere in Massachusetts.  Massachusetts has five Housing Court divisions (Boston Housing Court, Northeast Housing Court, Worcester Housing Court, and Western Housing Court) which cover most of the state.  However, there is a large portion of Massachusetts that is not in a geographical jurisdiction of a Housing Court, including many cities in the Greater Boston region (including Somerville, Medford, Revere, and Chelsea).  With the exception of Boston Housing Court, Housing Court divisions sit in multiple locations within its geographical jurisdiction.  Northeast Housing Court, for example, hears cases in courtrooms in Salem, Lynn, Lowell, and Lawrence.  Visit the Housing Court’s website to find out if there is a Housing Court for your dispute.

Housing Court has some important features that make it a good option for resolving housing disputes.  Housing Court has trained mediators in each of their courts who can attempt to help resolve disputes in lieu of trial.  Mediation is particularly useful for evictions, as the majority of these cases are settled and do not go to trial.  District Courts (where evictions are also commonly brought) sometimes have similar mediation services, but these are not always as readily available as the services offered in Housing Court.

Another benefit of Housing Court is having experienced judges who know and understand housing law.  Housing law is complex, and it is not uncommon to find judges who aren’t familiar with many of the issues that come up in housing cases.  This doesn’t happen in Housing Court: the judges have hear the issues in these cases many times before.

Housing Courts are thought by some to be “tenant friendly”, with a preference towards tenants over landlords (and former homeowners over banks).  I personally believe this perception comes from the fact that Massachusetts’s housing laws are consumer orientated and lean in favor of tenants’ rights.  From my experience in every single one of the Housing Courts in Massachusetts, I believe a party can get a fair decision on their matter.  I do believe, however, that the decision on where to bring a case is an essential decision, and one that an experienced attorney should decide.  Although understanding what is Housing Court and the work it does is important for making the best decision for you, this is no replacement for having a trusted attorney by your side.  If you have a case in Housing Court, contact me for a consultation.

MA SJC Issues Important Decision on Consumer Protection Demand Letters

The Massachusetts Supreme Judicial Court issued an important decision on consumer protection demand letters last week, that is of particular importance to Massachusetts foreclosure defense.  The case, Moronta v. Nationstar Mortgage LLC,  is an interpretation of the consumer protection demand letters that are required for Massachusetts’s Consumer Protection Law (a full copy of the decision is below).

Overview of Massachusetts’s Consumer Protection Law

Massachusetts’s Consumer Protection Law (commonly known as “Chapter 93A”) prohibits “unfair and deceptive” practices by businesses.  The scope of this law is broad, and has been used successfully for a variety of consumer protection claims.  For foreclosure defense, Chapter 93A claims have been effective for loan modification denial claims; courts have increasingly allowed these lawsuits based on a loan servicer’s repeated refusal to properly review a loan modification application.

To bring a Chapter 93A claim against a business, a consumer is required to send the business a demand letter and provide them thirty days to make a settlement offer.  These consumer protection demand letters are an essential requirement of this law; courts have thrown out Chapter 93A claims for a claimant’s failure to send one of these letters (or to send a letter that makes a proper demand to the business).

Exceptions to the Demand Letter Requirement

A consumer does not need to send a demand letter if “if the prospective respondent does not maintain a place of business or does not keep assets within the commonwealth.”  The question in Moronta was whether one or both of these two exemptions are needed to avoid sending the demand letter.  As the Court explained: “if the defendant keeps assets in the Commonwealth, but does not maintain a place of business here, must the plaintiff serve a demand letter?”  The Court answered no: either one of these exceptions (no assets or no place of business in the Commonwealth) is an exception to the consumer protection demand letters under Chaper 93A.

How Does Moronta Affect Massachusetts Foreclosure Defense?

Moronta is of particular importance for Massachusetts foreclosure defense.  Because Massachusetts is a non-judicial foreclosure state (where a bank does not need to go to court to do a foreclosure), homeowners often need to go on “the offense” in avoiding foreclosure, through a civil action.  The demand letter requirement under Chapter 93A can be a burden for borrowers who have less than thirty days before a scheduled foreclosure to pursue a legal action.  Moronta will be a help for homeowners with cases against national banks and loan servicers, many of which do not have offices in Massachusetts, and would trigger the exception to the demand letter requirement.

Despite the benefit of Moronta for consumers, I caution consumers (especially homeowners with foreclosure defense claims) from pursuing Chapter 93A claims without the benefit of legal counsel.  Chapter 93A may be intended to help consumers, but consumer protection claims are often still too complicated for a non-lawyer to take on.  Consult an attorney if you believe you have a viable cause of action.

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Speak to a Lawyer for Legal Advice

Happy 2017!  I hope the new year is a good one for you.  In this post, I want to discuss why you should speak to a lawyer for legal advice; advice that will serve you well in this new year (and for years to come).

If I had to guess, I would say that more mistakes in law are made from people who receive “legal advice” from non-lawyers.  The biggest culprit, of course, is the Internet: today, it is easier than ever to create a official looking website that claims to be the authority on an area of law.  This occurs for all different types of legal matters, but especially for foreclosure defense: the Internet is filled with websites that attempt to explain foreclosure defense myths to vulnerable homeowners.

As the old adage goes, “saying something doesn’t make it so.”  Merely creating a website, or offering purported “legal advice”, does not make that information truthful.  Many times, such advice—while well intended—is flat out wrong.  The results can be devastating: I have seen claimants lose cases (and their homes) from relying upon advice with no basis in law.

Those offering such “legal advice” won’t tell you what I will write here: law is difficult.  TV lawyers may make our work seem easy, but the truth is that lawyering requires enormous time, effort, and yes, training.  Training is the key part of this: we require lawyers to attend law school and pass bar examination for a reason.  No, law school alone doesn’t fully prepare someone to practice law, but a legal education is essential for making tough legal decisions.  With this in mind, you should never, never, never trust anyone but a licensed lawyer for legal advice.  Speak to a lawyer for legal advice, and avoid the inevitable problems that come from taking poor advice from a non-lawyer.  The picture above is a coffee mug available for sale on Amazon; it is meant as a “gag gift”, but its slogan has an essential message: don’t replace the advice of a trained attorney with something found on a random website.

This post isn’t meant to discard the use of reputable websites and information sources that assist those with legal needs.  I am proud that this blog has helped many homeowners and other lawyers in making important decisions on legal matters.  This blog, however (like any similar legal resource) is merely an aid towards helping those with legal needs get the assistance they need (a reason why I encourage anyone with help in defending against a foreclosure to consult an attorney).

President-Elect Trump and the Foreclosure Crisis

white-house

President-Elect Trump’s selection of Steven Mnuchin to head the Department of Treasury has raised a troubling story about this nominee’s involvement with OneWest Bank, a national financial institution (which has since been acquired by CIT Bank).  OneWest is reported to have foreclosed a 90-year-old-woman’s home for a $0.27 payment error.   OneWest Bank has also been alleged to have made a mess out of reviewing borrowers for loan modifications and proceeding with foreclosure while loss mitigation options have been under review.  All of these raise questions regarding President-Elect Trump and the Foreclosure Crisis, namely, how the new administration will assist struggling  homeowners trying to avoid foreclosure.

The federal Home Affordable Modification Program (“HAMP”) is set to expire at the end of 2016, and the Trump Administration will need to decide whether to extend this program, or offer another federal program in its place.  HAMP has done little to help the many homeowners in need of this assistance, and it will be interesting to see whether the new administration keeps the program, replaces it, or eliminates this type of assistance all together.

Another important policy matter for the Trump Administration will be whether the President-Elect keeps many of the Obama Administration’s consumer protection efforts, namely the Consumer Protection Financial Bureau (“CPFB”) and its regulations for banks and loan servicers.  The CFPB has issued numerous regulations on how loan servicers are to review loan modification applications and deal with borrower’s concerns about their accounts.  Regulations are issued by a president’s administration, unlike laws, which Congress must pass.  Because of this, regulations are subject to change when a new president comes into office.  Time will tell whether President-Elect Trump keeps in place many of these rules, or goes in a different direction than the previous administration.  Stay tuned!

Attorney Sherwin Argues Foreclosure Appeal Before Massachusetts’s Supreme Judicial Court

SJC

I had the honor of arguing before the Massachusetts Supreme Judicial Court (“SJC”) this week on a foreclosure appeal.  The SJC is Massachusetts’s highest court and the final decision maker on Massachusetts law.  The SJC often takes cases where the law in a particular area is uncertain.  In recent years, the SJC has heard an increasing number of foreclosure cases, which shows that this area of law continues to evolve.

My appeal concerned whether G.L. c. 244, § 15A, a law requiring a mortgagee to inform a local municipality about a foreclosure sale thirty days after it happened, is a requirement of the foreclosure process.  Different courts across Massachusetts have taken different positions on this, making this a matter that the SJC needs to resolve.  Click here to watch the oral argument.

My experience before the SJC reminded me of the importance of having an attorney who knows and understands the process of pursuing an appeal.  A appeal is a review of a case that was heard before a trial judge or jury; the appellate judges do not hear the testimony of witnesses or review evidence, and are limited to reviewing the entire record presented in the lower court.  A foreclosure appeal is a particular challenge to bring: foreclosure law constantly changes, and a successful appeal requires knowing and understanding the most recent changes in the law.  My appeal will likely be decided in the next three to four months, stay tuned!

I was deeply humbled by my appearance before the SJC.  With the recent election forcing many Americans to look closely at our form of government, I had a chance to see Massachusetts’s highest court up close.  I many not always agree with the SJC’s decisions, but I can’t doubt the Court’s sincerity and devotion to the “rule of law” in our state.  I’m proud to be a Massachusetts attorney and look forward to continuing my practice in this great state.

If you are in need of an appellate attorney, contact me for a consultation.  The importance of having an experienced appellate attorney on your side can be the difference between winning or losing your case.

Once Foreclosure Begins, Can It Be Stopped?

Foreclosure by Sale

Once foreclosure begins, can it be stopped?  In Massachusetts, the answer is “yes.”

The start of the foreclosure process in Massachusetts begins with a series of notices sent to the homeowner, informing them of the foreclosure sale date.  These notices are also published in a local newspaper.  While this is the official beginning of the foreclosure process, the homeowner has usually been provided notice of the foreclosure well in advance of these notices, through letters from the bank informing them of the loan default and offering them an opportunity to cure the default.  At this point, the sale is scheduled, but has not occurred.  Here, there are several options that homeowners can do to stop a foreclosure.

If the homeowner has not applied for a loan modification, they can speak with the lender and see if the lender is willing to consider reviewing them for this loss mitigation assistance.  If the homeowner applies far enough in advance of a foreclosure sale, the lender may be willing to do so and postpone the foreclosure.  Generally, however, a lender will not postpone a foreclosure sale if a loan modification application is received after a scheduled sale date.

If the lender is unwilling to stop a foreclosure sale, a homeowner may be able to ask a court to stop the foreclosure, if there are grounds for challenging the foreclosure’s validity.  A homeowner can request a temporary restraining order or preliminary injunction to stop a foreclosure.  Obtaining the help of an attorney in doing this is highly, highly recommended.

A homeowner can also consider filing bankruptcy to stop foreclosure.  A bankruptcy creates an automatic stay against all creditors, including a foreclosure sale.  A homeowner, again, should consult with an attorney before taking this action.

After a foreclosure sale occurs, a homeowner still has a right to challenge the foreclosure’s validity.  A homeowner can seek a declaratory judgment or another type of court order requesting that the foreclosure be rescinded.  While it is possible to stop a foreclosure after a sale has occurred, it is much harder than fighting a foreclosure before a sale has happened.  It is, however, not impossible.

If you find yourself facing a foreclosure, contact me for a consultation to see if I can be of help.

Breaking a Loan Modification

agreement

For homeowners trying to avoid foreclosure, getting a loan modification (where the lender agrees to adjust the monthly payments to an affordable amount for the borrower) would seem to be the solution for beating foreclosure.   Believe it or not, however, some lenders don’t follow through with these plans: the breaking a loan modification by a loan servicer is an unfortunate reality for many homeowners.

I’ve seen this occur in different ways.  In the first scenario, the homeowner receives a trial payment plan (“TPP”), where the homeowner is approved for a modification and is required to make three payments under the new modified loan amount.  The homeowner signs the required paperwork, makes the three payments, and expects to get the permanent modification.  The loan servicer, however, refuses to give them the permanent modification, despite the homeowner doing everything that was required of them.

In the second scenario, the servicer “forgets” about the loan modification months, and sometimes even years, after the modification has begun.  Believe it or not, some servicers simply refuse to outright honor a modification, despite the homeowner having been approved for this loss mitigation assistance.

Fortunately, the law is often on the side of homeowners in these matters.  Many courts have held that breaking a loan modification is a breach of contract: a violation of a legally binding agreement that entitles the homeowner to relief in court.  Homeowners in these cases can sue for damages, and ask for both monetary damages and the remedy of specific performance, which asks the court to reinstate the parties’ loan modification agreement.  In one of my successful cases on such a matter, I was able to negotiate a reinstatement of a loan modification where the loan was brought current to the date of the settlement, as if the homeowner had been making payments all along.

Homeowners who are in one of these situations should contact a foreclosure defense attorney as soon as possible.