Cohen v. Federal National Mortgage Association

Filing 18

District Judge Timothy S Hillman: ORDER entered granting 7 Motion for Judgment on the Pleadings. (Castles, Martin)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
____________________________________
JUDD D. COHEN
Plaintiff,
v.
FEDERAL NATIONAL MORTGAGE
ASSOCIATION
Defendant.
___________________________

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CIVIL ACTION
NO. 13-40100-TSH

ORDER ON DEFENDANT FEDERAL NATIONAL MORTGAGE ASSOCIATION'S
MOTION FOR JUDGMENT ON THE PLEADINGS (Docket No. 7)
March 28, 2014
HILLMAN, D.J.
Plaintiff Judd D. Cohen ("Plaintiff") brought an action against Federal National Mortgage
Association ("Defendant") for the wrongful foreclosure of a residential mortgage. Specifically,
Plaintiff alleged that Defendant's right-to-cure notice failed to strictly comply with M.G.L. c.
244 § 35A and with the terms of the mortgage. Defendant moved for judgment on the pleadings,
and this Court held a hearing on that motion on February 14, 2014.
In their briefs and at the hearing, the parties agreed that the lower courts were split on the
issue of whether the right-to-cure notice required under § 35A is part of the statutory sale and
thus requires strict compliance. The parties further agreed that it would be prudent for this Court
to await the decision of the Massachusetts Supreme Judicial Court ("SJC") in U.S. Bank Nat.
Ass'n v. Schumacher before ruling on Defendant's motion, as this decision would likely be
dispositive.

In Schumacher, the SJC considered "whether § 35A is part of the foreclosure process
itself and, if so, whether a mortgagee's failure to comply strictly with its provisions, particularly
the notice requirements, renders a foreclosure sale void."  467 Mass. 421, 422 (2014).
Specifically, the defendant in Schumacher failed to accurately disclose the mortgagee, or anyone
holding thereunder, in the right-to-cure notice it sent to the plaintiff as required by § 35A. Id. at
427-28. The SJC noted that the "[f]ailure to comply strictly with the power of sale renders the
foreclosure sale void." Id. at 428 (citing U.S. Bank Nat'l Ass'n v. Ibanez, 458 Mass. 637, 646–
647, 941 N.E.2d 40 (2011)). However, the SJC concluded that a right-to-cute notice issued
pursuant to § 35A is "designed to give a mortgagor a fair opportunity to cure a default" rather
than being the first step in terminating the mortgagor's rights through the power of sale. Id. at
430-31. Therefore, the right-to-cure notice does not relate to the foreclosure of mortgages by the
exercise of a power of sale such that Ibanez requires strict compliance. Id. at 431.
Here, Plaintiff argued that Defendant's foreclosure is void because the notice-to-cure
failed to strictly comply with § 35A or with the mortgage's acceleration clause. After
Schumacher, it is clear that Massachusetts law does not require strict compliance with § 35A.
Moreover, Plaintiff's argument that the notice-to-cure must strictly comply with the mortgage's
acceleration clause, lest the foreclosure be void, is based on the language in Ibanez requiring
strict compliance with the statutes governing the power of sale. Schumacher states that the rightto-cure notice is not a step in exercising the power of sale, but a way for mortgagors to avoid
such a consequence. Therefore there is no basis for Plaintiff's contention that failure to strictly
comply with the terms of the mortgage governing the right-to-cure notice voids the foreclosure.1

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It is worth noting that the only alleged failure to comply with the terms of the mortgage's acceleration clause is that
the mortgage servicer, on behalf of the mortgagee, rather original lender or mortgagee, sent the notice.

Conclusion
For the reasons set forth above, Defendant's Motion for Judgment on the Pleadings
(Docket No. 7) is granted.
SO ORDERED.

/s/ Timothy S. Hillman
TIMOTHY S. HILLMAN
UNITED STATES DISTRICT JUDGE

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