Standing Is Limited In ‘Soldiers and Sailors’ Actions – For Both Plaintiffs and Defendants

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Earlier this week, the Massachusetts Supreme Judicial Court (the “SJC”) held that a plaintiff who is not a present mortgagee (or the mortgagee’s agent) has no standing to bring an action under the Massachusetts Soldiers’ and Sailors’ Civil Relief Act for a determination that the named defendant is not entitled to the protections of the Federal Servicemembers Civil Relief Act (the “SCRA”).

In HSBC Bank USA, N.A., Trustee v. Matt, the Court vacated the Land Court’s Judgment in favor of HSBC Bank USA, N.A. (“HSBC”), reversing the Land Court’s decision that HSBC had standing as the mere holder of a contractual right to obtain the subject mortgage. (The SJC acknowledged that HSBC claimed to be the present mortgage holder as a factual matter, but noted that the Land Court did not rely on this assertion. See the SJC’s Footnote 15.)

In the same decision, the Court held that the named defendant, Jodi B. Matt (“Matt”), had no standing to appear in the action or to assert any defenses to it because she did not claim to be entitled to protections afforded by the SCRA (which, generally, protects servicemembers from mortgage foreclosures conducted without a Court order).

In holding that neither party had standing and vacating the Land Court’s Judgment, the Court (Lenk, J.) wrote as follows:

  • As an admitted non-servicemember, Matt was not entitled to be heard in the action, and the Land Court “should not have accepted or entertained Matt’s filings.”
  • The plaintiff bringing a servicemember action must establish its standing, and, if a question as to standing appears, the Court must reach the issue sua sponte;
  • A contractual right “to become the holder” of the subject mortgage is not sufficient to establish the plaintiff’s standing in a servicemember action;
  • Instead, only mortgagees “and those acting on behalf of mortgagees” may bring such proceedings, with the Court expressly defining “mortgagee” as a person or entity both (i) holding the mortgage, and also (ii) holding the note or acting on behalf of the note holder (see the SJC’s Footnote 10 in the Matt decision, together with Eaton v. Federal Nat’l Mortgage Ass’n, 462 Mass. 569, 571 (2012));
  • The preclusive effect of judgments entered in servicemember actions is limited: a judgment holding that the named defendant is not entitled to SCRA protections “does not itself in any way establish the purported mortgagee’s status” in a subsequent challenge to foreclosure; and
  • Finally, but notably, the Land Court’s Judgment in Matt overreached in comparison to the current applicable Massachusetts statutory language insofar as it stated that HSBC was “authorized and empower[ed] to make an entry and to sell the property covered by the mortgage” — instead, the Judgment should have been limited to a determination that Matt was not entitled to the protections of the SCRA (see Footnote 16).

To review author Jennifer E. Greaney’s biography or find her contact information, click here.


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