• DYE CULIK PC | Consumer Protection Division

Mortgage Servicer Must Prove Authorization to Foreclose on Behalf of Fannie Mae


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Under Massachusetts law, a mortgage servicer is permitted to foreclose on behalf of the note holder. Here, Sovereign Bank (now Santander) was the servicer and Fannie Mae was the note holder.

In the case, both the homeowner and the bank filed motions for summary judgment, motions seeking a decision in their favor without a trial. The homeowner argued that Sovereign Bank did not have proof that it was authorized to act for Fannie Mae. Sovereign Bank, on the other hand, provided documentation stating that it serviced the loan for Fannie Mae, but that did not show the right to foreclose.

The trial court ruled in favor of Fannie Mae, and the homeowner appealed.

Overturning the trial court’s decision, the Appeals Court ordered a trial based on Sovereign Banks’s failure to provide sufficient proof that it was authorized to foreclose on behalf of Fannie Mae. There was a “genuine factual dispute” about whether Fannie Mae authorized the foreclosure.

This case shows that banks must be able to provide extremely specific proof of their right to foreclose. If the bank who is foreclosing is Fannie Mae, but the loan is serviced by another bank, there must be documentation proving a link between the two, and specifically authorizing foreclosure of the homeowner’s mortgage.

A link to the Appeals Court’s decision is here: Khalsa v. Sovereign Bank

Here are some other helpful links:

  1. Check if your loan is owned by Fannie Mae

  2. Check if your loan is owned by Freddie Mac

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