AG Coakley Issues Statement on the SJC Decision in Bevilacqua v. Rodriguez
BOSTON – A decision by the Massachusetts Supreme Judicial Court (SJC) today in Bevilacqua v. Rodriguez, reaffirmed that a mortgage holder must have both “jurisdiction and authority” –a valid assignment of mortgage - in order to foreclose on a property.
Attorney General Martha Coakley issued the following statement:
“This case is just one example of a much larger problem. In the rush to foreclose, the banks’ reckless origination and foreclosure practices have created a domino effect that has harmed Massachusetts homeowners as well as third-party purchasers who purchased properties after foreclosure.
This is yet another clear demonstration that the only way we are going to restore a healthy economy is to address the foreclosure crisis and hold the banks accountable for their actions.”
This case determined that because U.S. Bank did not hold a valid assignment of the mortgage at the time it initiated foreclosure proceedings, it failed to acquire title. As a result, not only did U.S. Bank foreclose without legal authority to do so, but its failure means that it was unable to transfer clear title to Mr. Bevilacqua.
As the SJC recently observed in U.S. Bank, N.A. v. Ibanez, many investors in the secondary mortgage market ignored longstanding requirements of Massachusetts law concerning when and how a mortgage holder may exercise its right to foreclose, resulting in numerous invalid foreclosures.
Mr. Bevilacqua was a third-party purchaser of property that was foreclosed upon by U.S. Bank prior to the Land Court’s initial decision in Ibanez. Mr. Rodriguez is the prior mortgagor. Because U.S. Bank did not hold a valid assignment prior to commencing foreclosure proceedings the foreclosure was deemed invalid. U.S. Bank foreclosed without legal authority and was unable to transfer clean title to Mr. Bevilacqua.
Bevilacqua brought an action under the so-called “try title” statute because the Ibanez decision had clouded Bevilaqua’s claim to the property. It allows the holder of a clouded title to initiate an action to clear title without waiting for adverse claimants to sue first. The try title process provides that if adequate notice is issued and an adverse claimant fails to respond then the petitioner may obtain an order barring that claimant from ever challenging the petitioner’s right to title.
The Land Court denied Bevilacqua’s petition, ruling that one seeking to use the try title process must have at least a plausible claim to the title. The Court ruled that Bevilacqua has no such claim to title where he acquired a deed following an invalid foreclosure. The Land Court held that Bevilacqua acquired whatever it was that U.S. Bank had to sell as of the foreclosure. Because, per Ibanez, at the time of the foreclosure, the bank held nothing, Bevilacqua acquired nothing and had no standing as a result.
Today, the SJC affirmed the Land Court decision and reaffirmed the essential holdings of Ibanez: that the mortgage holder must have a valid assignment of mortgage in order to foreclose on a property. The Court also held that one cannot use the try title process to extinguish the right of redemption – a mortgagee can only foreclose by strict adherence to the statutory processes for foreclosure by exercising the power of sale or foreclosure by entry.
The Attorney General’s Office filed an amicus brief in this case in April 2011 and presented oral arguments before the SJC on May 2, 2011.