COMMONWEALTH OF MASSACHUSETTS APPEALS COURT
NOVASTAR MORTGAGE, INC.
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
After foreclosing on the mortgage of Elliot Saffran, and purchasing the Saffran property located at 26 Debbie Lane in Milford (property) at the foreclosure sale, the plaintiff, Novastar Mortgage, Inc. (Novastar) brought this summary process action for possession and monetary damages. [FN1] After a jury-waived trial in the District Court, judgment entered in favor of Novastar. Upon Saffran’s appeal to the Appellate Division, the judgment of summary process was affirmed. For the reasons discussed, we reverse the decision of the Appellate Division and order entry of a new decision reversing the judgment of the District Court and remanding the case to that court for further proceedings in light of U.S. Bank Natl. Assn. v. Ibanez, 458 Mass. 637 (2011), a case decided while Saffran’s appeal was pending in this court.
Saffran challenges Novastar’s title to the property, claiming that the foreclosure sale was invalid because, as alleged by Saffran, Novastar was not the holder of the mortgage at the critical stages of the foreclosure process. [FN2] The original mortgage identified Novastar as the ‘Lender’ but a separate corporation, Mortgage Electronic Registration Systems, Inc. (MERS), as mortgagee ‘solely as a nominee for Lender and Lender’s successors and assigns.’ Saffran claims that by failing to produce a valid assignment of the mortgage from MERS to Novastar at the summary process trial, Novastar failed to establish, as required by statute, that it was the ‘present holder’ of the mortgage at the time of the notice of sale and the subsequent foreclosure sale. See id. at 648, citing G. L. c. 183, § 21, and G. L. c. 244, § 14 (‘[O]nly a present holder of the mortgage is authorized to foreclose on the mortgaged property’).
The trial judge did not address this issue directly. As the Appellate Division observed, the judge implicity rejected the argument because he awarded Novastar possession. Apparently, the trial judge took the position that because Novastar produced a foreclosure deed which stated that Novastar was the present holder of the mortgage from Saffran to MERS by virtue of a conveyance, the burden was on Saffran to show that Novastar was not the mortgage holder at the time of the notice of sale and the foreclosure sale of the property. [FN3]
In summary process proceedings, it is a foreclosing entity’s burden to establish that ‘title was acquired strictly according to the power of sale provided in the mortgage . . . .’ Wayne Inv. Corp. v. Abbott, 350 Mass. 775, 775 (1966). In Ibanez, 458 Mass. at 647, the Supreme Judicial Court stated that ‘[o]ne of the terms of the power of sale that must be strictly adhered to is the restriction on who is entitled to foreclose.’ Thus, as the court explained, a plaintiff that is ‘not the original mortgagee to whom the power of sale was granted [but] rather, claim[s] the authority to foreclose as [an] assignee’ must demonstrate that it was the assignee of the mortgage both ‘at the time of the notice of sale and the subsequent foreclosure sale.’ Id. at 648. ‘A plaintiff that cannot make this modest showing cannot justly proclaim that it was unfairly denied [relief].’ Id. at 651.
We interpret the holding in Ibanez as placing the burden to present proof of an actual assignment on the entity, here Novastar, which is claiming the right to foreclose as an assignee. Therefore, the trial judge erred by requiring Saffran to demonstrate that Novastar was not the mortgage holder at the critical stages of the foreclosure process. Accordingly, we reverse the decision of the Appellate Division and a new decision is to enter reversing the judgment of the District Court and remanding the case to that court for a new determination in light of the principles discussed in Ibanez.
By the Court (Kantrowitz, Mills & Vuono, JJ.),
Entered: June 10, 2011.
|FN1. In June, 2006, Saffran borrowed $420,000 from Novastar and secured the loan with a mortgage on the property.|