Massachusetts Homeowners, Tenants Score Big Win As State High Court OKs Foreclosure Challenge In Post-Sale, Housing Court Eviction Process

In Boston, Massachusetts, The Boston Globe reports:

• The state’s highest court has ruled that people fighting eviction from homes they lost to foreclosure can challenge the validity of a property seizure in housing court after the fact, a decision that housing rights advocates are calling a major victory.



• The Massachusetts Supreme Judicial Court’s unanimous ruling, released yesterday, involved KC Bailey of Mattapan, whose home was taken back by his lender through foreclosure in 2007. Two years later, Bailey, 65, contested his impending eviction during a housing court proceeding, saying the foreclosure process was flawed.



• Bailey claimed he learned of the foreclosure only after finding an eviction notice taped to a fence surrounding his three-bedroom Colonial, which had been in his family since 1979. The Vietnam veteran said he refused to leave because he was not given proper notice of the sale and is still living there.



• Bank of New York, which set out to evict Bailey, argued that the housing court didn’t have the authority to consider a challenge to a foreclosure already finalized, and the judge agreed. Bailey appealed and the Supreme Judicial Court decided to take the case. It now goes back to housing court.



• The decision was hailed by local housing rights advocates, who said it will force lenders to prove they legally own a property before evicting occupants, and will lead to more negotiations with financially-distressed borrowers seeking to save their homes.

***

• Because Massachusetts doesn’t require courts to sign off on foreclosures, the eviction process can be the first opportunity for a former homeowner to contest a property seizure in court.



• The ruling also will provide a new legal tool to tenants fighting evictions from foreclosed homes, housing attorneys said.



• “This decision ensures that if a bank is going to walk into court and try to evict a homeowner, it has to prove there has been a valid foreclosure,’’ said Esme Caramello, deputy director of the Harvard Legal Aid Bureau, a branch of Harvard Law School that provides free representation to low-income clients and represented Bailey.

***

• Pamela S. Kogut, an attorney who filed a brief in support of Bailey’s appeal for a group of nonprofits, said yesterday’s ruling will give former homeowners a place to contest the validity of a foreclosure during the eviction process, without having to file an additional lawsuit in state Superior Court. “The burden shifts to the bank to establish that it does have title,’’ she said.

For the story, see SJC expands right to challenge bank seizures (Mattapan man’s objection that he wasn’t told of sale goes back to housing court).

For the ruling, see Bank of New York v. Baliey, SJC-10801 (Mass. August 4, 2011)..

Go here for the case docket and links to the various legal briefs filed in this case.

Thanks to Deontos for the heads-up on this story.