On Monday, the Massachusetts Supreme Judaical Court decided HSBC Bank v. Jodi Matt (SJC-11101).
For a quick review…
HSBC Bank attempted to foreclose on Matt’s house. In the commonwealth, we practice statutory foreclosure, meaning there is no need for the entity foreclosing to go before a judge. However, as a means of protecting our military, Massachusetts requires that the foreclosing entity get a judgment in Land Court to ensure compliance with the Servicemembers Civil Relief Act. Technically, only those whom are on active duty are protected by the Servicemebers Civil Relief Act. However, Matt, decided to test the waters.
In Matt the defendant challenged the bank’s standing. With many banks selling their mortgages in the form of mortgage backed securitized trust, the original bank holder may no longer hold the note and mortgage. In fact in the case of Matt, HSBC only held a future interest in the mortgage. Essentially, they had an option on a piece of the mortgage, had not exercised that option, and still were trying to take Matt’s house away.
What the court decided….
The SJC decided that in order for HSBC to foreclose they must have standing. Specifically,
“Those who, like HSBC, are said to have an option to become the holder of a mortgage do not have the present authority to foreclose. See Eaton v. Federal Nat’l Mtge. Ass’n, supra….we conclude that only mortgagees or those acting on behalf of mortgagees have standing to bring Servicemember proceedings.”
What does this mean…
Plaintiff’s whom bring foreclosing action under the Servicemeber’s proceeding must satisfy the judge that they in fact have the right to do so. (logical)
However, the SJC also held that only those entitled to the protection of the Servicemember Act can challenge the standing of those seeking a judicial order to proceed with foreclosure under the Servicemebers Act.
So a partial victory for the consumer, but also a partial victory for the big bad banks.