Massachusetts Supreme Judicial Court Rejects Challenge To Attorney’s Authority To Conduct Foreclosure Activities For Client Without Written Authorization

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The Massachusetts Supreme Judicial Court (the “SJC) has rejected a challenge to the authority of an attorney to conduct foreclosure activities on behalf of clients without specific written authorization to perform those activities. See Federal National Mortgage Association v. Rego, et al., No. SJC-11927, 2015 WL 10895667 (Mass. May 24, 2016). At a foreclosure sale conducted by GMAC Mortgage, LLC, Federal National Mortgage Association (“Fannie Mae”) purchased the home formerly owned by Edward and Emanuela Rego. When Fannie Mae filed a complaint for summary process in the Housing Court seeking possession of the home, the Regos argued that the foreclosure sale was void because the attorneys for GMAC lacked authority to undertake foreclosure activities on GMAC’s behalf because their actions had not been authorized by a prior writing pursuant to Mass. Gen. L. c. 244, § 14 (“Section 14”).

Section 14 provides in relevant part that “the mortgagee or person having estate in the land mortgaged, or a person authorized by the power of sale, or the attorney duly authorized by a writing under seal, or the legal guardian or conservator of such mortgagee or person acting in the name of such mortgagee or person, may, upon breach of condition and without action, perform all acts authorized or required by the power of sale…”. The Regos argued that, because GMAC’s counsel had not received prior written authorization from GMAC to undertake publication of notice of the foreclosure sale and service of the notice of sale on the Regos.

The SJC was not convinced. While Section 14 does refer to an attorney duly authorized by a writing under seal as one of the people who could conduct the foreclosure activities, a review of the legislative history and statutory language led the SJC to the conclusion that the “attorney duly authorized” action referred to an attorney in fact, a general agent authorized to act on behalf of the holder of the mortgage. An attorney at law, an agent authorized to act as counsel in the courts and other legal proceedings, what a modern audience thinks of when they read the word “attorney.” Given that reading, GMAC’s foreclosure counsel instead qualified as a “person acting in the name of such mortgagee or person” under Section 14, and the SJC determined that the legislature did not intend to require a mortgagee to issue written authorization to its legal counsel to perform foreclosure activities on the mortgagee’s behalf.

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