Bill Limiting Foreclosure Challenges Passes Senate

Banker & Tradesman
September 18, 2015

The state Senate on Thursday voted 31-7 to pass legislation that limits challenges to property titles to the first three years after the foreclosure, giving some relief to the owners of previously foreclosed-upon homes who would like to sell them.

The bill works to restore the titles of foreclosed properties after thousands of foreclosure sales in Massachusetts were put at risk of being voided as the result of state Supreme Judicial Court decisions.

The legislation provides legislative relief for Massachusetts residents who have purchased foreclosed properties or purchased homes where there were prior foreclosures in the chain of title. Currently, when these owners attempt to sell or refinance their home, some learn that their titles are void according to interpretations of the law by the state’s highest court.

“The foreclosure crisis is still affecting thousands of residents across Massachusetts and this legislation will help remove some uncertainty for those affected by a cloudy chain of title. This bill strikes an importance balance between holding offending parties liable for deceptive practices while also protecting homeowners,” Senate President Stan Rosenberg (D-Amherst) said in a statement.

“While the foreclosure crisis has certainly caused problems for foreclosed homeowners, it has also taken a heavy toll on people who bought foreclosed homes in good faith, only to have their lives disrupted by a clouded title and uncertainty,” said Sen. Bruce Tarr (R- Gloucester). “Our system of real property ownership demands greater certainty and reliability, and this bill will help us move in that direction.”

The state Supreme Judicial Court ruled that a foreclosure is void if the foreclosing lender could not produce a written assignment of its mortgage prior to the first publication of notice. If this occurred at any time in the chain of the title, the current purchaser of the property is left without a clear title as a result.

This bill allows the affidavit that is recorded during the resale of the property to serve as conclusive evidence that the foreclosing lender is in compliance unless the foreclosure has been challenged within three years of its recording. Under current law, the affidavit can be rebutted by other evidence that shows the foreclosing lender was not in compliance.

This bill provides a reasonable timeframe for those who have been improperly foreclosed on to assert their rights. The legislation also enables foreclosed homeowners to pursue actual and punitive damages against lenders who engaged in deceptive foreclosure practices.

The bill now goes before the House of Representatives for consideration.