Judge Long of the Massachusetts Land Court recently reaffirmed his groundbreaking May decision invalidating a foreclosure sale due to a lack of properly-recorded assignment. The assignment issue came down to this. Due to the bundling of mortgages for sale and trading on Wall Street, mortgages have been transfered more and more frequently over the past few years. Under Massachusetts mortgage law, these transfers have to be documented at the registry of deeds, and only the record owner of the mortgage has the right to foreclose. Before Judge Long's ruling the practice had been to backdate the various mortgage assignments after a foreclosure sale to clean up the chain of title. Judge Long held that this was impermissible and that the assignments had be recorded on the date of the foreclosure.
What does all this mean for consumers here in Massachusetts? First, the validity of many mortgage foreclosures over the past few years have been put into doubt. This has the potential to create serious problems for many parties, including the people who purchased the foreclosed properties. For example, it might be possible to challenge the validity of a foreclosure sale with a backdated assignment and seek to cure the mortgage arrears in a Chapter 13 bankruptcy. However, this would be a very challenging case.
This decision will affect consumers who have defaulted on their mortgages in another way. It will create delay. Mortgage lenders will have to obtain and record the evidence of the assignments leading up to the foreclosing lender. This will take time and effort and will inevitably create more delay in the already bogged-down foreclosure process here in Massachusetts.