Massachusetts Supreme Court Allows More Homeowners to Challenge Defective Foreclosures
The case, Galiastro v. MERS, was filed by homeowners against the Mortgage Electronic Registration Systems (also called MERS). The homeowners attempted to obtain a restraining order preventing MERS from foreclosing on their home. MERS, they claimed, was not the holder of their note, and therefore was not entitled to foreclose.
The lower court dismissed their case, but they appealed at the same time as the Massachusetts Supreme Judicial Court’s decision in Eaton v. Federal National Mortgage Association, which ruled foreclosing banks must hold a homeowner’s note, but only if the sale is scheduled after the date of that decision, June 22, 2012. The Galiastros argued that because they had appealed at the same time as the Eaton appeal, their case should not have been dismissed.
The Supreme Judicial Court agreed stating that any case that was in the appeals process at the same time as the Eaton case, on or before June 22, 2012, should also be entitled to require the bank to hold their note.
The court also held that where the foreclosing bank is alleged to not be the holder of the note, a homeowner’s case should not be dismissed at the initial stage of the case.
The law is clear that for any foreclosure after June 22, 2012, a foreclosing bank has to hold the note or act on behalf of the note holder. But this decision may give some relief to homeowners whose cases were on appeal before that date.
A copy of the decision is available here: Galiastro v. MERS