Pinti v. Emigrant Mortgage: Strict Compliance Required for Paragraph 22 of the Standard Mortgage

The Supreme Judicial Court issued its long awaited decision last week in Pinti v. Emigrant Mortgage, holding that a foreclosing entity needs to strictly comply with paragraph 22 of the standard mortgage.  (DISCLAIMER:  I represented the plaintiffs in Pinti in their Superior Court case).

The "standard mortgage" is the mortgage form used for almost all residential mortgages and comes from Fannie Mae/Freddie Mac (two of the largest holders of mortgages in the United States). Paragraph 22 of this mortgage requires the mortgagee to provide the homeowner with a default notice prior to foreclosure, containing specific disclosures.  These disclosures include:

• A thirty-day right to cure the loan default
• The borrower's right to reinstate after acceleration of the loan
• The right to bring a court action to assert the non-existence of a default or any other defense to acceleration and the foreclosure sale

The default notice in Pinti incorrectly stated one of these disclosures.  The question for the Court was whether strict compliance was required for this notice.

This matter of strict compliance was the make or break issue for this case.  The plaintiffs in Pinti, like most homeowners, could not show prejudice for this type of error (as in, they could not show that this error was the direct reason why the foreclosure occurred).   To have a viable claim, the plaintiffs in Pinti needed to show that any failure to comply with this notice made the foreclosure void.  The Supreme Judicial Court agreed that this heightened standard of review is necessary for paragraph 22.

Many people following this case (myself included) expected the Court to decide the case similar to U.S. Bank v. Schumacher, where the Court held that the statutory right-to-cure notice (which comes from Massachusetts law, and not the mortgage itself), was not a part of the foreclosure process, and therefore not requiring strict compliance.  The important difference was that the disclosure requirement in Pinti came from the mortgage itself. 

The Court made Pinti prospective:  it applies to only notices sent after July 17, 2015 (the Court left the question open as to whether those homeowners who have raised this defense when the Pinti decision came out are also entitled to the benefit of this holding).

So, what are the take home lessons of Pinti?

• The Supreme Judicial Court reaffirmed that strict compliance is required for the terms of the mortgage.  Beyond the default notice requirement of paragraph 22, Pinti could also have implications for other requirements in the standard mortgage. 
• Real risks comes in purchasing a foreclosed property.  The buyer of the home in Pinti was a third-party buyer (someone other than the foreclosing entity).  Anyone considering buying a foreclosed property should hire an attorney and get a title insurance policy.

Are you facing foreclosure?  Contact me to see if the Pinti decision (or another foreclosure defense) can help you save your home.

BLOG POST:

http://maforeclosurelawblog.sherwinlawfirm.com/2015/07/pinti-v-emigrant-mortgage.htm

WEBSITE:

http://www.sherwinlawfirm.com

Beware of Foreclosure Defense Scams

In addition to the loss of homeownership for many Americans, the continuing foreclosure crisis has another dire consequence: the rise of foreclosure defense scams.  A recent story from New Jersey about a family losing their home due to a nationwide foreclosure scheme demonstrates the importance of struggling homeowners needing to be careful in seeking foreclosure defense assistance.

Foreclosure scams often involve attempts to provide loan modifications to struggling homeowners.  These often come from purported companies offering to assist with the loan modification process.  Often, they reference the Home Affordable Modification Program ("HAMP")--a federal loan modification program.  Almost always, these scammers directly solicit homeowners through mail, the Internet, or phone.  These con artists often require homeowners to pay large, upfront fees and typically do little to assist with foreclosure defense.   

How should struggling homeowners avoid these scams?  By staying away from any shady offer to assist with foreclosure defense.  I recommend that homeowners only accept help from a reputable attorney, a non-profit organization, or a state or federal government agency.  Private companies offering loan modification or other foreclosure defense assistance should raise a red flag for homeowners, if these purported businesses do not have proper credentials. 

Let me add an important caveat to this advice: I'm not suggesting that those in need of foreclosure defense avoid seeking the help of anyone requiring a fee for their services.  While there are many free services available for homeowners trying to avoid foreclosure, these programs aren't the best for everyone.  There are many reputable professionals--myself included--who do charge a fee for their work.  Homeowners should not rule out paying someone to help save their home, but do need to be diligent in making sure that their money goes to a reputable professional.

BLOG POST:

http://maforeclosurelawblog.sherwinlawfirm.com/2015/07/beware-of-foreclosure-defense-scams.html

WEBSITE:

http://www.sherwinlawfirm.com 

Happy Fourth of July!