In its decision earlier this year in U.S. Bank Natl. Assn. v. Schumacher (pdf), the Supreme Judicial Court addressed the impact of a failure to comply with requirements for providing notice of the mortgagor’s right to cure a default pursuant to M.G.L. c. 244, § 35A (our post on Schumacher is here). The recent Appeals Court case of Haskins v. Deutsche Bank National Trust Co. (pdf) provides additional guidance with respect to Section 35A notices.
Haskins granted a residential mortgage to the entity known commonly as “MERS.” Although MERS was the legal mortgage holder, the loan was beneficially held by Deutsche Bank as Trustee of a mortgage securitization trust.
Neither MERS nor Deutsche Bank serviced the loan. Rather, IndyMac Mortgage Services was responsible for the billing and accounting, and it also apparently was responsible for foreclosure decisions.
Section 35A requires the notice to inform the mortgagor of “the name and address of the mortgagee, or anyone holding thereunder.” Haskins defaulted and IndyMac sent him two notices of default and of his right to cure, pursuant to Section 35A. However, the notices identified IndyMac as the mortgage holder.
Haskins never cured his default, but instead sought to prevent the foreclosure, claiming the Section 35A notice was ineffective because IndyMac was not the mortgage holder.
The Appeals Court rejected both the borrower’s call for strict compliance with Section 35A and also the Bank’s suggestion that the proper standard for reviewing a Section 35A letter is whether it was fundamentally unfair. Instead, the court looked to the realities of the business world and the intent of Section 35A. Schumacher had recognized that the purpose of the notice requirement is to give the mortgagor a fair opportunity to cure a default before the loan is accelerated and the foreclosure process begins. In order to accomplish that purpose, “the statutory notice is designed to provide the mortgagor with the information necessary to contact the party who holds all relevant information about the loan . . . and who holds authority to . . . allow the mortgagor to cure any default” or to discuss modifying the loan.
The Appeals Court then observed that neither MERS nor the Bank had responsibility for modifying the loan or making foreclosure decisions. Those responsibilities rested with the servicer, IndyMac. Therefore, considering the statutory objective, the court concluded that the term “mortgagee” in Section 35A includes the servicer.
Although he did not dispute that he had received the notices, Haskins also argued that Section 35A requires that they be sent by certified mail. The Appeals Court shot down this claim.
Haskins and Schumacher make clear that the courts are not granting borrowers who have defaulted on their mortgage loans an easy out based on claims of technical noncompliance with the requirements of Section 35A.