Supreme Judicial Court Issues U.S. Bank v. Schumacher; Finds that Right-to-Cure Notice is Not a Power of Sale Statute

I confess that this news may not qualify as still being “breaking” because it came out several weeks ago, but my crazy schedule kept me from blogging sooner.  However, as this is a major foreclosure decision, I am going to stick with calling it breaking news.  🙂

The Supreme Judicial Court issued the long-anticipated U.S. Bank v. Schumacher decision and held that the required right-to-cure notice was not a power of sale requirement.

The right to cure statute, found in G.L. c. 244 Section 35A, requires mortgagees to provide homeowners with a right to cure their mortgage loan debt prior to foreclosure.  Unlike other states, such as Maine, Massachusetts’s law has specific requirements about what these notices must include, including the name of the mortgagee, mortgage loan broker/originator, and amount needed to cure the default.

These specific requirements of these notices became a problem for foreclosing entities, who would often send these notices loaded with defects and mistakes.  A growing number of trial courts in Massachusetts held that any defect in these notices invalidated the underling foreclosure; a interpretation based on the “strict compliance” standard required for foreclosures.

The Supreme Judicial Court held otherwise, and decided that these right-to-cure notices were not part of the applicable statues for foreclosure.  As such, strict compliance is not required for these notices and a defect in one of these letters alone is not enough to invalidate a foreclosure.

The Court did hold that a foreclosure may be challenged against one of these notices as a matter of equity, if the homeowner can show that as a matter of fairness, the defective notice is enough to justify stopping a foreclosure.

So, what are the take home lessons of Schumacher?

  • Earlier is better than later for fighting a foreclosure.  While post-foreclosure cases can sometimes be won, there are many claims available to homeowners that are much more effective if brought as early as possible in the process.  However, with that said . . .
  • Schumacher reaffirmed strict compliance for the power of sale statutes: G.L. c. 244 Sections 11-17C.  From my reading of Schumacher, foreclosures not strictly complying with one of these statutes are void.  This leaves some defenses available for homeowners fighting a foreclosure after it occurred.