Party Who Successfully Disputed Being Party to Mortgage Cannot Claim Rights Under Disavowed Mortgage to Challenge Foreclosure

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The Massachusetts Appeals Court (“Appeals Court”), in an unpublished opinion, has held that where an alleged mortgagor has successfully argued that she is not party to a mortgage, she cannot later challenge a foreclosure of that mortgage on the grounds that the foreclosing bank allegedly violated her rights with respect to notice of the foreclosure.  21st Mortgage Corp. v. Lapham

Husband and wife jointly executed a promissory note and mortgage on a property in Carver, Massachusetts.  Upon a later refinancing, although the wife attended the closing, executed the mortgage, and initialed each page, the wife was not named a borrower on the promissory note secured by the new mortgage.  Some time after husband and wife divorced, husband stopped paying on the note, and the bank foreclosed on the mortgage.

Realizing that the wife was not a named borrower on the promissory note and mortgage, the bank brought an action in the Land Court to reform the mortgage and add the wife as a borrower, or in the alternative an order of equitable subrogation on the basis that the wife’s debt on the prior mortgage was extinguished using the new mortgage.  The wife disclaimed any rights or obligations under the new mortgage, arguing that she was not a party to it and disavowing her signature and initials on the new mortgage.  Accordingly, the Land Court granted the request for an order of equitable subrogation and denied the bank’s motion for summary judgment on reformation.  Following that denial, the bank dismissed its reformation claim and final judgment entered.

The mortgagee subsequently foreclosed, was the high bidder at the foreclosure auction, and filed a summary process action to obtain possession of the property from the wife.  The motion judge rejected the wife’s arguments regarding proper notice or other defects in the foreclosure process, granted summary judgment to the foreclosing mortgagee, and the wife appealed.

The Appeals Court affirmed the judgment granting possession to the mortgagee.  The wife had previously disclaimed any rights or obligations under the mortgage, defeated a motion for summary judgment on that basis, which in turn persuaded the bank to dismiss its claim for reformation of the mortgage.  Accordingly, the wife’s successful assertion of a position inconsistent with any rights or obligations under the mortgage in a prior judicial proceeding estopped her from asserting any rights under the mortgage in response to the summary process action.  

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