Hey didn’t I see you on Channel 7 a couple of weeks ago? What was that all about anyway and will it affect me if I sell my house?

Guilty. Yes that was me. I was interviewed by Hank Phillipi Ryan in connection with a story she was doing on a Land Court decision that came down last spring that has had an impact on the sale of bank owned homes commonly known in the trade as REO which is short for the bank regulatory  term Real Estate Owned, which references the properties that the banks come to own after they buy them at foreclosure. As most people are aware, once the mortgage loan is closed the loan is often sold , sometimes multiple times. The law always has been that the holder of the note is entitled to an assignment of the mortgage. In order to effectively foreclose on a mortgage , the entity foreclosing the mortgage must be the holder of the mortgage of record at the Registry of Deeds. However, because the holder of the note is entitled to an assignment, the Massachusetts Real Estate Bar Association issued a title standard stating that it did not matter if the assignment was recorded before or after the foreclosure sale so long as it was recorded. During the last several years however , courts across the country have, in order to slow the avalanche of foreclosures, insisted that the party seeking relief, the foreclosing mortgagee, prove that they were the holder of the mortgage of record at the registry of deeds. To foreclose a mortgage in Massachusetts under the power of sale, the lender must publish a notice of sale in a local newspaper for three successive weeks prior to the sale. The Land Court case held that if the lender was not the holder of record at the Registry of Deeds of the mortgage, or if the lender was not in possession of a validly signed and notarized assignment, at the time of the publication of the first notice then the foreclosure sale was void. Because that decision was contrary to existing law, many sales of REO properties were disrupted. The lenders were required to reforeclose the mortgages affected in order to deliver good title. Most mortgages are also foreclosed by the recording of a Certificate of Entry at the Registry of Deeds and after a period of three years the foreclosure is perfected by that method. So if you bought an REO property in the last three years you  may have an unpleasant surprise if you are trying to sell it.

If you have questions about this or any other real estate matter, please contact Tom Bennett at (617) 531-6574 or tvb@barronstad.com.