On April 4, 2011, the Supreme Judicial Court (SJC) heard argument in Bank of New York v. Bailey, another case arising from the foreclosure crisis.  Unlike some of the other recent cases, this one does not involve an Ibanez question.

Following a foreclosure, the foreclosed mortgagor sought to stop the bank’s follow-on eviction action.  The mortgagor claimed that the bank didn’t have good title because it had not complied with notice requirements in connection with the foreclosure sale. house.jpg

The Boston Housing Court decided that it didn’t have jurisdiction to determine the validity of the foreclosure.  In the absence of any viable post-foreclosure defenses, the court granted the bank’s motion for summary judgment (pdf) and evicted the mortgagor. 

Expressing its continued interest in foreclosure matters, the SJC grabbed the case for direct appellate review (SJC-10801).  Four organizations joined in amicus briefs supporting the mortgagor.  Although there are some procedural and waiver questions, during oral argument the court focused on the principal issue of the parties’ respective rights and remedies in the Housing Court.

At the argument, there seemed to be no dispute that other courts could have addressed the mortgagor’s defenses.  The issue at hand was whether the Housing Court had jurisdiction to do so. 

The justices appeared unimpressed by arguments that the resources of the Housing Court might be overwhelmed by the challenge of resolving title questions.  Some of the justices, especially Justice Botsford, seemed concerned about the rights of mortgagors (who often represent themselves) facing eviction after failing to receive notice of a foreclosure sale.  Justice Cordy, on the other hand, took the view that the mortgagor had not raised any serious issue that the bank had failed to comply with the statutory requirements.  Especially in light of the mortgagor’s voluntarily dismissal of his separate Superior Court action challenging the adequacy of the foreclosure, Justice Cordy appeared skeptical of the mortgagor’s claims. 

The court also posed some questions on the adequacy of the standard foreclosure affidavit, which often states summarily that the mortgagee complied with the statutory requirements without substantiating that statement.

Some practical approaches that were raised during the argument included staying a Housing Court eviction case to permit a Land Court or Superior Court action to address the foreclosure issue, and the possibility of an interdepartmental transfer pursuant to Trial Court Rule XII and M.G.L. c. 211B, § 9.  

As noted in this previous post, on May 2, 2011 the SJC will hear argument in FNMA v. Nunez, SJC-10881, another Housing Court case concerning post-foreclosure eviction rights.

We will follow these cases and report on the outcomes.