Bay State High Court Invites Supplemental Briefing In Pending Foreclosure Case That Looms As Possible Disaster For Massachusetts Land Titles

From The Boston Globe's Real Estate Now blog:

• Attorney Richard D. Vetstein reports on another court case about foreclosure paperwork problems.
  
  The Supreme Judicial Court has just issued an unusual order in the very important Eaton v. Federal National Mortgage Association case, indicating its deep concern over whether its ruling with have a disastrous impact on foreclosure titles and, if so, whether its ruling should be applied prospectively rather than retroactively.
  
  As outlined in my prior post on the case, the Court is considering the controversial question of whether a foreclosing lender must possess both the promissory note and the mortgage in order to foreclose. If the SJC rules against lenders, it could render the vast majority of securitized mortgage foreclosures defective, thereby creating mass chaos in the Massachusetts land recording and title community. If you thought U.S. Bank v. Ibanez was bad, Eaton v. FNMA could be Apocalypse Now.
  
  The court is requesting supplemental briefing on whether requiring a unity of the mortgage and the underlying promissory note, in order for there to be a valid foreclosure, would cloud any title that has a foreclosure in the chain of title, regardless of how long ago the foreclosure occurred, and if so, what legal or practical measures exist that might limit the consequences of such a requirement.
  
  The court is also concerned that if it were to hold that unity of the mortgage and note is required under existing law, whether the court’s holding should be applied prospectively only.

For more, see SJC concerned with toxic foreclosure fallout.

Go here for links to the briefs filed in this case.