JAMES B. NUTTER & COMPANY
ESTATE OF BARBARA A. MURPHY & others (and two consolidated cases).
Heard: October 2, 2017.
actions commenced in the Land Court Department on October 27,
2015; January 28, 2016; and February 11, 2016, respectively.
A motion for partial judgment on the pleadings was heard by
Robert B. Foster, J., and the cases were reported by him to
the Appeals Court.
Supreme Judicial Court on its own initiative transferred the
cases from the Appeals Court.
Bahls (Uri Strauss also present) for Brett Jamieson. Effie
Gikas Tchobanian for the plaintiff.
Benkoski, for Estate of Barbara A. Murphy & others, was
present but did not argue.
Present: Gants, C.J., Lenk, Gaziano, Lowy, Budd, Cypher,
& Kafker, JJ.
and 2008, three elderly homeowners obtained loans from James
B. Nutter & Company (Nutter), secured by reverse
mortgages on their homes. A few years later, two of the
borrowers died; the third took ill and could no longer live
in her home. Alleging default, Nutter now seeks to foreclose
on the mortgages. Rather than proceed directly to
foreclosure, however, Nutter brought separate actions in the
Land Court against each borrower or the executors of their
estate,  seeking in each case a declaratory
judgment allowing it to foreclose pursuant to the statutory
power of sale.
the reverse mortgages adhered to Nutter's standard form,
which states in paragraph 20 that, in the event of default,
"[l]ender may invoke the power of sale and any other
remedies permitted by applicable law." The issue we must
resolve is whether this language in the reverse mortgage
incorporates the statutory power of sale as set forth in G.
L. c. 183, § 21, and allows Nutter to foreclose on the
mortgaged property in accordance with the requirements in
§ 21. We hold that it does.
many retirees, one of the most reliable potential sources of
income in later life is the accrued equity in their homes.
See Consumer Financial Protection Bureau, Issue Brief: The
costs and risks of using a reverse mortgage to delay
collecting Social Security, at 8 (2017). In order to secure
cash for their living expenses, many retirees choose to
borrow against their home equity. Id. at 9.
for them to do so is through a home equity conversion
mortgage, which is a unique kind of loan available to
homeowners age sixty-two or older. See Consumer Financial
Protection Bureau, Reverse Mortgages: A Discussion Guide, at
1, 3 (2017). These mortgages are commonly referred to as
"reverse mortgages" because, instead of making
payments to the lender, the borrower receives cash
from the lender, either as a line of credit, in
monthly payouts, or as a lump sum. Id. at 3, 12. As
in a traditional mortgage, a reverse mortgage is secured by
the borrower's home. Unlike a traditional mortgage,
however, the loan does not become due until the borrower dies
or no longer lives in the home; interest and fees are added
to the loan balance over time and the entire balance is
typically paid from the sale of the home. Id. at 3,
distinctive feature of a reverse mortgage is that typically
it secures a nonrecourse loan, meaning that the borrower is
not personally liable for repayment of the debt. In other
words, the lender must "look exclusively to the
mortgaged property for repayment." Summers
v. Financial Freedom Acquisition LLC, 807
F.3d 351, 355 (1st Cir. 2015).
Nutter's actions for declaratory judgment.
uses a standard form for its reverse mortgages. Paragraph 9
of this form states the grounds for acceleration of the debt.
It provides that Nutter can require immediate payment in full
if, among other grounds, the borrower dies, or the mortgaged
property is no longer the borrower's principal residence.
Paragraph 10 provides that the borrower shall have no
personal liability for repayment of the debt and that Nutter
cannot obtain a deficiency judgment against the borrower in
the event of foreclosure: "Lender may enforce the debt
only through sale of the Property." Paragraph 20
outlines Nutter's remedies in the event of default. It
states, in relevant part:
"Foreclosure Procedure. If Lender requires immediate
payment in full under Paragraph 9, Lender may invoke the
power of sale and any other remedies permitted by applicable
law. . . . At this sale Lender or another person may acquire
the Property. This is known as 'foreclosure and
sale.' In any lawsuit for foreclosure and sale, Lender
will have the right to collect all costs allowed by
these three actions, Nutter moved for partial judgment on the
pleadings, seeking a judicial declaration that the language
in paragraph 20 incorporates the statutory power of sale as
defined in G. L. c. 183, § 21. The judge granted
Nutter's motions, concluding that Nutter's reverse
mortgage incorporated the statutory power of sale by
reference because the statutory power of sale is a
"remed[y] permitted by applicable law." The judge
reported the three cases to the Appeals Court ...