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Federal National Mortgage Association v. Rego

Supreme Judicial Court of Massachusetts, Essex

May 24, 2016

EDWARD M. REGO & another. [1]

          Heard: November 3, 2015.

         Summary Process. Complaint filed in the Northeast Division of the Housing Court Department on August 31, 2012. Motions for partial summary judgment were heard by Timothy F. Sullivan, J., and a motion to dismiss counterclaims was also heard by him.

         The Supreme Judicial Court on its own initiative transferred the case from the Appeals Court.

          Michael Weinhold for the defendants.

          Richard E. Briansky for the plaintiff.

          Thomas J. Santolucito & Danielle C. Gaudreau, for Real Estate Bar Association for Massachusetts, Inc., & another, amici curiae, submitted a brief.

          Daniel Bahls & Amanda Winalski, for Community Legal Aid, amicus curiae, submitted a brief.

          Present: Gants, C.J., Spina, Cordy, Botsford, Duffly, Lenk, & Hines, JJ.

          DUFFLY, J.

         The plaintiff, Federal National Mortgage Association (Fannie Mae), filed a complaint for summary process in the Housing Court to establish its right to possession of a house that had been owned by Edward M. Rego and Emanuela R. Rego (Regos) that Fannie Mae purchased at a foreclosure sale. In response, the Regos argued that the foreclosure sale conducted by the bank that held the mortgage on the property, GMAC Mortgage, LLC (GMAC), was void because GMAC's attorneys had not been authorized by a prior writing to undertake the actions set forth in G. L. c. 244, § 14 (§ 14). The Regos also asserted an equitable defense and counterclaims pursuant to G. L. c. 93A. A Housing Court judge allowed Fannie Mae's motion for summary judgment "as to possession only, " and scheduled a bench trial on the Regos' counterclaims under G. L. c. 93A. Thereafter, Fannie Mae moved to dismiss the counterclaims for lack of subject matter jurisdiction; that motion was allowed. Final judgment for possession entered in favor of Fannie Mae, and the Regos appealed. We transferred the case to this court on our own motion.

         We are confronted with two issues in this appeal.[2] First, we consider the meaning of the language in § 14, authorizing "the attorney duly authorized by a writing under seal" to perform acts required by the statutory power of sale. We conclude that the expression is a term of art that refers to a person authorized by a power of attorney to act in the place of the person granting that power. At the time the provision was enacted by amendment in 1906, the phrase "power of attorney" had the same meaning as a "power under seal." Here, because no person purported to act under a power of attorney, but only as legal counsel acting on behalf of a client, the statutory language on which the Regos rely to challenge the validity of the foreclosure is inapplicable. We conclude also that legal counsel may perform the acts at issue in this case without written authorization, as the "person acting in the name of such mortgagee." G. L. c. 244, § 14. The foreclosure therefore suffers no defect on the asserted ground that GMAC failed to provide such authorization to its attorneys.

         Second, we consider whether, in a postforeclosure summary process action, the Housing Court may consider defenses and counterclaims seeking relief pursuant to G. L. c. 93A, and conclude that the Housing Court has limited authorization to entertain such claims. To the extent that the Regos appear to assert an equitable defense to the foreclosure sale and seek, in addition to damages, the relief of voiding the sale, the judge properly could have addressed those claims in the summary process action. It is not apparent from the judge's decision that he considered these claims when deciding the parties' cross motions for summary judgment. We therefore vacate the judgment and remand for further proceedings consistent with this opinion.


         The Regos purchased a house on Green Street in Billerica in 1976. In 1995, they refinanced the home mortgage loan by borrowing $122, 000 from Empire of America Realty Credit Corporation, and executed a promissory note and mortgage in its favor. Empire of America Realty Credit Corporation assigned the mortgage to Wells Fargo Bank, and the following year, Wells Fargo Bank assigned the mortgage to GMAC Mortgage Corporation. Eventually, GMAC Mortgage Corporation assigned the mortgage to a related entity, GMAC, which ultimately foreclosed on the property.

         In 2008, GMAC notified the Regos by mail that they were in default under the terms of the mortgage loan because they had missed one monthly payment in the amount of $1, 723.12, and that, in addition, they owed $77.52 in late charges and $11.25 in fees. In April, 2010, GMAC notified the Regos that they were eligible for the Federal Home Affordable Modification Program, 12 U.S.C. § 5219 (HAMP), and offered modified terms of payment.[3]The Regos rejected the offer, explaining that they could not afford the modified terms and requesting a more affordable modification. The next month, GMAC sent a second HAMP modification offer, proposing terms similar to the first offer, which the Regos also apparently rejected. On March 15, 2011, GMAC notified the Regos that GMAC was now due a total of $35, 803, including mortgage loan payments, late charges, and fees, and informed them that they had thirty days in which to cure the default.

         On May 4, 2011, the law firm of Orlans Moran, on behalf of its client, GMAC, sent the Regos a "Notice of Intention to Foreclose." The notice was in letter form, on Orlans Moran letterhead, and was signed, "GMAC Mortgage, LLC, By its Attorneys, Orlans Moran PLLC." Orlans Moran attached to the letter a copy of the mortgagee's notice of sale of real estate, which it published in the Billerica Minuteman on May 5, 12, and 19, 2011. The notice identified the property and contained information concerning a public auction to be held on May 27, 2011. The following information was set forth at the end of the notice of sale: "GMAC Mortgage, LLC, Present Holder of said Mortgage, By its Attorneys, Orlans Moran PLLC."

         On May 23, 2011, the Regos sent GMAC a facsimile transmission requesting a "negotiated pay-off" to avoid the pending foreclosure, scheduled for May 27, 2011. The Regos explained that they were attempting to obtain a reverse mortgage loan, but that the new loan amount would still leave them $10, 000 short of the pay-off amount. They asked GMAC for "compassion" in negotiating a pay-off agreement to help them stay in their home. On May 25, 2011, GMAC acknowledged the Regos' request, informed them that the request was being processed, and stated that GMAC would not "conduct a foreclosure sale" while the request was under review. The next day, GMAC denied the loan modification request. GMAC proceeded with the foreclosure auction the following day, where it was the highest bidder. GMAC eventually assigned its bid to Fannie Mae, and executed a foreclosure deed.[4]

         Fannie Mae served the Regos with a notice to quit and subsequently filed a summary process complaint for ...

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