April 25, 2019 Practice Points

The Importance of Complying with Statutory Formalities in Non-Judicial Foreclosures and Preserving Objections

For lenders claiming possession of a property by virtue of a foreclosure deed, rather than through a judicial foreclosure, it's important to go back to basics

by Julianna M. Charpentier, Esq.

For lenders claiming possession of a property by virtue of a foreclosure deed, rather than through a judicial foreclosure, the importance of strict compliance with statutory formalities and mortgage provisions cannot be overstated. Given the strict requirements, it is imperative that lenders’ counsel keep in mind the need to maintain a clear record and adequately preserve objections so that relevant issues may be subject to review on appeal. Federal Home Loan Mortgage Corporation vs. Bartleman, 94 Mass. App. Ct. 800 (2019), a recent Massachusetts Appeals Court decision, exemplifies both of these imperatives.

In Bartleman, Federal Home Loan Mortgage Corporation (Freddie Mac) claimed possession of a property on Nantucket, by virtue of a foreclosure deed on a property, after the defendants had defaulted on their loan obligation. Their predecessor in interest, PFA, had recorded the foreclosure deed, as well as an affidavit of sale certifying compliance with G.L. c. 244, § 14. Section 14 of Chapter 244 of the Massachusetts General Laws delineates the Commonwealth’s foreclosure requirements. The recording of the affidavit was required in Massachusetts under G.L. c. 244, § 15. The trial court admitted the affidavit de bene, but later struck it for the reasons explained below. The affidavit was not only required by statute; under Massachusetts case law, it also acted as prima facie evidence of compliance with G.L. c. 244, § 14.

PFA’s assistant vice president and legal department manager testified that he had personal knowledge of PFA’s business records pertaining to the Nantucket property, including the foreclosure deed and the affidavit. However, the defendants argued that Massachusetts case law limited the admissibility of certified copies of affidavits of sale to the context of summary judgment motions, and that the PFA witness did not have personal knowledge of the contents of the affidavit. The judge admitted the certified copy of the foreclosure deed but did not admit the affidavit, despite Freddie Mac’s arguments that the documents should have both been admitted as certified copies of public records and as business records. Freddie Mac properly preserved their objection at trial.

After Freddie Mac presented additional evidence, none of which touched on the contents of the affidavit, the defendants moved for involuntary dismissal and raised, for the first time, that there had been a failure to comply strictly with the notice of foreclosure requirements of paragraph 22 of the Fannie Mae/Freddie Mac form mortgage. The court denied the defendants’ motion and entered judgment of possession in favor of Freddie Mac but did not award Freddie Mac use and occupancy damages.

The defendants appealed to the appellate division of the district court, which held that, without the affidavit, Freddie Mac had failed to prove compliance with the notice and publication provisions of G.L. c. 244, § 44, and furthermore had failed to prove that it had satisfied the notice requirements under paragraph 22. The appellate division notably, however, did not review the trial court’s decision to strike the affidavit.

Freddie Mac appealed to the appeals court, which was tasked with determining, among other issues, whether Freddie Mac had properly preserved its objection to the striking of the affidavit not only at trial but before the appellate division. At the appellate division, Freddie Mac stated three times in its brief, without elaboration, that striking the affidavit was error. The appeals court held that, although it was not “fulsome appellate advocacy, it was enough” to alert the appellate division to the issue and thus preserve Freddie Mac’s claim on appeal. Because the Affidavit (1) constituted prima facie evidence of a right of possession and (2) was necessary for Freddie Mac to prove its superior right of possession, both the properly preserved objection at the trial level, and the narrowly preserved arguments at the appellate division, were indispensable to Freddie Mac’s case.

After trial, but before the appeals court’s decision, the Massachusetts Supreme Judicial Court (the SJC) held in Pinti v. Emigrant Mortgage Co., 472 Mass. 226 (2015) that strict compliance with paragraph 22’s notice requirements was necessary for a foreclosure sale to be valid. In a follow-up decision, the SJC held that the rule articulated in Pinti was only applicable to cases pending in the trial court, in which the issue was timely and fairly raised, before the SJC handed down its decision in Pinti.

In Bartleman, the defendants did not raise their claim that Freddie Mac’s failure to comply with paragraph 22’s notice requirements until after trial. Therefore, the appeals court held that “the issue was not raised at a juncture when Freddie Mac could respond by presenting evidence to rebut the claim of noncompliance.” Notably, however, the appeals court held that, because the issue was raised before Pinti was decided and before judgment was entered, Freddie Mac could have responded or moved to reopen the evidence to establish its compliance with paragraph 22. The appeals court, therefore, remanded the matter for the limited purposes of (1) allowing the parties to present evidence of strict compliance with paragraph 22 and (2) the subject matter of the statutory affidavit. This remand rendered Freddie Mac’s partial success on further review in the appeals court a pyrrhic victory; the defendants got a second bite at the apple.

Bartleman is a reminder to all attorneys, but particularly those practicing in such regulated areas as lending and mortgage foreclosures: It is important to (1) ensure that clients are aware of any requirements imposed by statute for nonjudicial foreclosures and 2) properly preserve key issues at all junctures, for review on appeal.

Julianna M. Charpentier, Esq., is an associate with Robinson + Cole in Boston, Massachusetts.

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