Pinti v. Emigrant Mortgage: Strict Compliance Required for Paragraph 22 of the Standard Mortgage
- A thirty-day right to cure the loan default
- The borrower’s right to reinstate after acceleration of the loan
- The right to bring a court action to assert the non-existence of a default or any other defense to acceleration and the foreclosure sale
The default notice in Pinti incorrectly stated one of these disclosures. The question for the Court was whether strict compliance was required for this notice.
This matter of strict compliance was the make or break issue for this case. The plaintiffs in Pinti, like most homeowners, could not show prejudice for this type of error (as in, they could not show that this error was the direct reason why the foreclosure occurred). To have a viable claim, the plaintiffs in Pinti needed to show that any failure to comply with this notice made the foreclosure void. The Supreme Judicial Court agreed that this heightened standard of review is necessary for paragraph 22.Many people following this case (myself included) expected the Court to decide the case similar to U.S. Bank v. Schumacher, where the Court held that the statutory right-to-cure notice (which comes from Massachusetts law, and not the mortgage itself), was not a part of the foreclosure process, and therefore not requiring strict compliance. The important difference was that the disclosure requirement in Pinti came from the mortgage itself.
- The Supreme Judicial Court reaffirmed that strict compliance is required for the terms of the mortgage. Beyond the default notice requirement of paragraph 22, Pinti could also have implications for other requirements in the standard mortgage.
- Real risks comes in purchasing a foreclosed property. The buyer of the home in Pinti was a third-party buyer (someone other than the foreclosing entity). Anyone considering buying a foreclosed property should hire an attorney and get a title insurance policy.