• DYE CULIK PC | Consumer Protection Division

Sovereign Bank Foreclosed Without Authority from Freddie Mac, Says Homeowner


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Massachusetts Appeals Court ruled that a bank failed to provide sufficient documentation to prove that it was authorized to foreclose.

The case, Khalsa v. Sovereign Bank, was filed by homeowners in Superior Court asking the foreclosure sale of their home to be voided.

Under Massachusetts law, a foreclosure is invalid unless the foreclosing party holds the mortgage and also either holds the underlying mortgage note, or acts on behalf of the note holder.

The issue for the court was whether Sovereign was authorized to act – foreclose – on behalf of Freddie Mac. At the time of the foreclosure, Sovereign held the mortgage, but Freddie Mac held the note.

The homeowners argued that “Sovereign Bank does not have authority from the holder of the mortgage note.” Sovereign, on the other hand, tried to prove that it was authorized to act for Freddie Mac by producing two affidavits.

The court ruled that Sovereign’s affidavits were insufficient under the court rules because the affiants did not have personal knowledge of what they were saying.

Because of the faulty affidavits, the Appeals Court held that the homeowners’ case should not be dismissed and the case should proceed to trial. There was a “genuine factual dispute exists as to whether Sovereign was acting as the authorized agent of the note holder,” said the Appeals Court.

This case highlights how important it is to properly challenge a bank’s claim that it has the right to foreclose. By putting the bank to its proof – demanding the documents that show it is authorized to foreclose, such as the mortgage, note, and affidavits – homeowners may be able to put off, or even void, a foreclosure.

The full title of the case is Khalsa v. Sovereign Bank, No. 14-P-1898, slip op. (Mass. App. Ct. Jan. 11, 2016)

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