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Eaton v. Federal National Mortgage Association

Appeals Court of Massachusetts, Suffolk

May 11, 2018

HENRIETTA EATON
v.
FEDERAL NATIONAL MORTGAGE ASSOCIATION & another[1] (and a companion case[2]).

          Heard: January 12, 2018.

         Summary process. Complaint filed in the Boston Division of the Housing Court Department on February 1, 2010. Civil action commenced in the Superior Court Department on April 8, 2011.

         Following review by the Supreme Judicial Court of the Superior Court action, 462 Mass. 569 (2012), the Housing Court action was transferred to the Superior Court; following consolidation, the cases were heard by Merita A. Hopkins, J., on motions for summary judgment.

          Anna I. Kurtz (H. Esme Caramello also present) for Henrietta Eaton.

          Amy B. Hackett for Federal National Mortgage Association & another.

          Present: Meade, Sullivan, & Kinder, JJ.

          SULLIVAN, J.

         In November, 2009, Green Tree Servicing, LLC (Green Tree), foreclosed on Henrietta Eaton's home, exercising the power of sale contained in her mortgage. Green Tree, acting as servicer for Federal National Mortgage Association (Fannie Mae), offered the highest bid at the auction. As Green Tree's assignee, Fannie Mae purchased the property and then brought an eviction action in Housing Court. On the theory that the foreclosure was void because Green Tree did not hold the mortgage note at the time of the foreclosure sale, Eaton brought her own declaratory judgment action in Superior Court and obtained a preliminary injunction against the eviction, an injunction which resulted in the Supreme Judicial Court's oft-cited opinion in Eaton v. Federal Natl. Mort. Assn., 462 Mass. 569 (2012) (Eaton I).[3]

         After the remand in Eaton I, the Housing Court matter was transferred to the Superior Court and the two cases were consolidated. In September, 2016, on cross motions for summary judgment, a Superior Court judge entered judgment for Fannie Mae and Green Tree in the consolidated cases.

         Eaton now appeals, making three arguments. First, she claims a genuine issue of fact exists regarding the physical possession of her promissory note at the time of the foreclosure. Second, she asserts that a preforeclosure right to cure notice sent by Fannie Mae's predecessor, BankUnited, FSB (BankUnited), did not strictly comply with the terms of her mortgage, as required by Pinti v. Emigrant Mort. Co., 472 Mass. 226 (2015).[4] Third, Eaton contends that a question of fact exists as to BankUnited's authority to send the right to cure notice. We vacate the judgment on the narrow issue of BankUnited's authority to send the right to cure notice, and affirm the judgment in all other respects, albeit on somewhat different grounds.

         Background.

         The general background of the case is set forth in Eaton I, which, as we have noted, considered the grant of a preliminary injunction. We recite the facts from the summary judgment record, reserving certain additional facts for later discussion.

         Eaton signed the original note payable to BankUnited on September 12, 2007. On or about October 1, 2007, Fannie Mae purchased a pool of loans from BankUnited, including Eaton's loan. Eaton defaulted, and BankUnited sent her a right to cure notice dated November 14, 2008. In November of 2009, Green Tree, which had been made Fannie Mae's servicer, conducted the foreclosure auction that resulted in this litigation.

         Discussion.

         Our review of the allowance of summary judgment is de novo, "because we examine the same record and decide the same questions of law" as the motion judge. Kiribati Seafood Co., LLC v. Dechert LLP, 478 Mass. 111, 116 (2017) . And, given that "both parties have moved for summary judgment, [we view] the evidence ... in the light most favorable to the party against whom judgment is to enter." Albahari v. Zoning Bd. of Appeals of Brewster, 76 Mass.App.Ct. 245, 248 n.4 (2010) .

         1. Physical possession of the note at the time of foreclosure.

         In Eaton's view, Fannie Mae must demonstrate that there is no dispute of fact that it had physical possession of the note at the time of the foreclosure.[5] See Eaton I, 462 Mass. at 571 (construing "mortgagee" as used in certain foreclosure-related statutes as "the person or entity then holding the mortgage and also either holding the mortgage note or acting on behalf of the note holder"). Citing Eaton I, 462 Mass. at 571 & n.2, Fannie Mae disagrees, stating that it is enough for it to have "owned" the note, regardless of whether it physically possessed the note, where Green Tree was an authorized servicer, acting on behalf of Fannie Mae. Thus, says Fannie Mae, any factual dispute over physical possession of the note is immaterial. The motion judge agreed, and, on this basis, declined to determine whether there were facts in dispute as to whether Fannie Mae had physical possession of the ...


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