Massachusetts Federal Court Dismisses Homeowner’s Foreclosure Challenge
Her house was foreclosed in 2010 and sold to new owners. Six years later, she filed the lawsuit at issue, challenging the validity of the foreclosure, and arguing that the conduct of the foreclosure violated the Massachusetts Consumer Protection Act, called Chapter 93A.
In all, the homeowner brought her lawsuit under six legal theories: (1) “to void or cancel assignment of the mortgage”; (2) wrongful foreclosure; (3) violation of Mass. Gen. Laws ch. 93A; (4) unjust enrichment; (5) “to set aside Trustee’s sale”; and (6) “to void or cancel Trustee’s foreclosure deed.”
The thrust of her claims was that she challenged an assignment of the mortgage from the Mortgage Electronic Registration System (MERS) to Citibank. Rejecting this challenge, the court distinguished between agreements that are “void” and those that are merely “voidable.” Voidable contracts, said the court, cannot be challenged if they are later ratified by the parties.
In this case, even if the assignment of her mortgage was voidable, it had later been ratified, and thus her claims were dismissed.
She also challenged whether the mortgage had been transferred according to the terms of the Pooling and Servicing Agreement governing the mortgage. A pooling and servicing agreement is like a trust. It determines, among other things, the date by which the mortgage must be transferred.
Rejecting this argument, too, the court held that Massachusetts homeowners do not have standing to challenge whether the pooling and servicing agreement was complied with. Even if it were violated, it would only render the assignment voidable. Many other courts in Massachusetts have concluded similarly.
Finally, the court dismissed the homeowner’s claims under Chapter 93A. There is a four-year statute of limitations under Chapter 93A. The homeowner’s claims were brought six years after the foreclosure. Thus, the claims were time-barred and were dismissed.
This case shows the importance of filing a lawsuit in a timely manner, and doing so by using viable legal theories.
The saving grace of the opinion was that the court acknowledged homeowners still may, in certain circumstances, challenge whether a bank has a right to foreclose. “Under Massachusetts law, a mortgagor has standing to challenge the validity of a foreclosure by reason of the mortgagee’s lack of legal authority to conduct it,” said the court.
The case is here: Proal v. JPMorgan Chase Bank
Culik Law has experience filing lawsuits against banks and challenging their standing to foreclose. If you believe you have legal claims related to a foreclosure, contact us to see if we can help.