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SJC-12139

            FEDERAL NATIONAL MORTGAGE ASSOCIATION   vs.
                 ELVITRIA M. MARROQUIN & others.1



            Essex.     January 9, 2017. - May 11, 2017.

 Present:   Gants, C.J., Lenk, Hines, Gaziano, Lowy, & Budd, JJ.


Mortgage, Foreclosure, Real estate. Real Property, Mortgage,
     Sale. Notice, Foreclosure of mortgage.



     Summary process. Complaint filed in the Northeast Division
of the Housing Court Department on June 18, 2012.

     The case was heard by David D. Kerman, J., on motions for
summary judgment.

     The Supreme Judicial Court granted an application for
direct appellate review.


     Cody J. Cocanig for the plaintiff.
     Dayne Lee (Eloise P. Lawrence also present) for Elvitria M.
Marroquin.
     Joshua T. Gutierrez, Daniel D. Bahls, & Andrew S. Webman,
for Lewis R. Fleischner & another, amici curiae, submitted a
brief.




    1
        Julio E. Vasquez and Christopher Vasquez.
                                                                        2


    GANTS, C.J.    In Pinti v. Emigrant Mtge. Co., 472 Mass. 226,

227, 232 (2015), we held that a foreclosure by statutory power

of sale pursuant to G. L. c. 183, § 21, and G. L. c. 244, §§ 11-

17C, is invalid unless the notice of default strictly complies

with paragraph 22 of the standard mortgage, which informs the

mortgagor of, among other things, the action required to cure

the default, and the right of the mortgagor to bring a court

action to challenge the existence of a default or to present any

defense to acceleration and foreclosure.   We applied this

holding to the parties in Pinti but concluded that our decision

"should be given prospective effect only."   Id. at 243.     We

therefore declared that the decision "will apply to mortgage

foreclosure sales of properties that are the subject of a

mortgage containing paragraph 22 or its equivalent and for which

the notice of default required by paragraph 22 is sent after the

date of this opinion," which was issued on July 17, 2015.         Id.

We did not reach the question whether our holding should be

applied to any case pending in the trial court or on appeal.

Id. at 243 n.25.   We reach that question here, and conclude that

the Pinti decision applies in any case where the issue was

timely and fairly asserted in the trial court or on appeal

before July 17, 2015.   Because we conclude that the defendants

timely and fairly raised this issue in the Housing Court before

that date, and because the notice of default did not strictly
                                                                    3


comply with the requirements in paragraph 22 of the mortgage, we

affirm the judge's ruling declaring the foreclosure sale void.

    Background.   In December, 2005, the defendants2 secured a

mortgage loan in the amount of $312,000 from American Mortgage

Express Corporation (American Mortgage) and, as security for the

loan, granted a mortgage on their home to Mortgage Electronic

Registration Systems, Inc. (MERS), which American Mortgage had

designated as the mortgagee in a nominee capacity.   MERS

subsequently assigned the mortgage to Bank of America, N.A.

(Bank of America), as successor by merger to BAC Home Loans

Servicing, LP, formerly known as Countrywide Home Loans

Servicing, LP.

    After the defendants failed to make their mortgage

payments, the loan servicer, Countrywide Home Loans Servicing,

LP, on October 17, 2008, mailed the defendants a notice of

intention to foreclose (notice of default).   The notice informed

the defendants that they were in default and set forth the

amount due to cure the default.   The notice warned in relevant

part:



    2
       The mortgage loan was secured by the defendants Elvitria
M. Marroquin and Julio E. Vasquez. The limited record before us
suggests that Christopher Vasquez is Marroquin's son, and that a
motion filed by the Federal National Mortgage Association to
amend the summons and complaint to include him was granted by
the Housing Court judge. For convenience, we refer to "the
defendants" throughout this opinion.
                                                                   4


         "If the default is not cured on or before January 15,
    2009, the mortgage payments will be accelerated with the
    full amount remaining accelerated and becoming due and
    payable in full, and foreclosure proceedings will be
    initiated at that time. As such, the failure to cure the
    default may result in the foreclosure and sale of your
    property. . . . You may, if required by law or your loan
    documents, have the right to cure the default after the
    acceleration of the mortgage payments and prior to the
    foreclosure sale of your property if all amounts past due
    are paid within the time permitted by law. . . . Further,
    you may have the right to bring a court action to assert
    the non-existence of a default or any other defense you may
    have to acceleration and foreclosure."

    The defendants did not cure the default, and in March,

2012, Bank of America gave notice and conducted a foreclosure

sale by public auction of the mortgaged home.   Bank of America

was the high bidder at the foreclosure auction and subsequently

assigned its winning bid to the Federal National Mortgage

Association (Fannie Mae or plaintiff), which properly recorded

the foreclosure deed conveying title of the property in May,

2012.   On June 18, 2012, Fannie Mae initiated a summary process

action in the Housing Court to evict the defendants from the

property.   On June 19, 2012, the defendants, representing

themselves but assisted by counsel, filed an answer in which, by

checking a box, they proffered as a defense to the eviction that

"[t]he plaintiff's case should be dismissed because it does not

have proper title to the property and therefore does not have

standing to bring this action and/or cannot prove a superior

right to possession of the premises."
                                                                   5


     For reasons not apparent from the record, Fannie Mae did

not move for summary judgment until June, 2015, where, among

other arguments, it contended that Bank of America had complied

with the terms of the mortgage in exercising the power of sale,

and specifically asserted that the notice of default had

complied with paragraph 22 of the mortgage.3   On September 23,

2015, the defendants filed a cross motion for summary judgment

in which they argued that the notice of default failed to

strictly comply with the terms of paragraph 22 of the mortgage

and that the defendants should be entitled to the benefit of our

decision in Pinti even though the notice of default was sent

well before the issuance of that opinion.

     In October, 2015, the judge granted the defendants' cross

motion for summary judgment and denied the plaintiff's motion.

     3
       Paragraph 22 of the mortgage provides that in the event
the borrower commits a breach of any term of the mortgage, prior
to acceleration of the loan the lender must notify the borrower
of

     "(a) the default; (b) the action required to cure the
     default; (c) a date, not less than [thirty] days from the
     date the notice is given to [the defendants], by which the
     default must be cured; and (d) that failure to cure the
     default on or before the date specified in the notice may
     result in acceleration of the sums secured by [the
     mortgage]."

Paragraph 22 further provides that such notice must inform the
borrower "of the right to reinstate after acceleration and the
right to bring a court action to assert the non-existence of a
default or any other defense of the borrower to acceleration and
sale." It also declares that, if the default is not timely
cured, the lender "may invoke the statutory power of sale."
                                                                    6


The judge found that the issue in Pinti had been "timely and

fairly raised," and concluded that our decision in Pinti should

apply to all cases similarly situated that were pending in the

trial court or on appeal where the issue had been timely and

fairly raised before July 17, 2015.   The judge also concluded

that the notice of default failed to strictly comply with the

requirement in paragraph 22 of the mortgage that the notice

shall inform the borrower "of the right to reinstate after

acceleration and the right to bring a court action to assert the

non-existence of a default or any other defense of the borrower

to acceleration and sale."   The judge found that, by stating,

"You may, if required by law or your loan documents, have the

right to cure the default after the acceleration of the mortgage

payments and prior to the foreclosure sale of your property

. . . ," and "you may have the right to bring a court action to

assert the non-existence of a default or any other defense you

may have to acceleration and foreclosure" (emphasis added), the

notice "significantly, and inexcusably, differed from, watered

. . . down, and overshadowed the notice that was contractually

and legally required by the mortgage."   He added that "there was

no excuse for the difference in language" and that it was

impossible to imagine any purpose for drafting a notice that

failed to track the language of the mortgage "unless, of course,
                                                                       7


the purpose was to discourage [b]orrowers from asserting their

rights."4

     After the judge issued his decision, the Appeals Court held

in Aurora Loan Servs., LLC v. Murphy, 88 Mass. App. Ct. 726, 727

(2015), that the Pinti decision applies to cases pending on

appeal where the claim that the notice of default failed to

strictly comply with the notice provisions in the mortgage had

been "raised and preserved" before the issuance of the decision.

Although the issue was not before it, the Appeals Court declared

that "the Pinti rule" did not extend to cases pending in the

trial court.     Id. at 732.   Relying on this dictum, the plaintiff

moved to vacate the judgment under Mass. R. Civ. P. 60 (b), 365

Mass. 828 (1974).     The judge denied the motion, and the

plaintiff appealed.       We allowed the defendants' application for

direct appellate review.

     Discussion.     1.   Application of the Pinti decision to

pending cases.     Our decision in Pinti was grounded in the

requirement in G. L. c. 183, § 21, that, before a mortgagee may

     4
       The judge analogized the warning in the notice of default
to a Miranda warning that informed a suspect before
interrogation:

          "You [may] have the right to remain silent. If you
     give up the right [and if you have that right], anything
     you say or do [may] can and will be used against you in a
     court of law. You [may] have the right to an attorney. If
     you cannot afford an attorney [and if you have that right],
     one [may] will be appointed for you. Do you understand
     these rights as they have been read to you?"
                                                                     8


exercise the power of sale in a foreclosure, it must "first

comply[] with the terms of the mortgage and with the statutes

relating to the foreclosure of mortgages by the exercise of a

power of sale."    Because the power of sale is a "substantial

power" that permits a mortgagee to foreclose without judicial

oversight, we followed the traditional and familiar rule that

"'one who sells under a power [of sale] must follow strictly its

terms'; the failure to do so results in 'no valid execution of

the power, and the sale is wholly void.'"     Pinti, 472 Mass. at

232-233, quoting U.S. Bank Nat'l Ass'n v. Ibanez, 458 Mass. 637,

646 (2011).   See Pryor v. Baker, 133 Mass. 459, 460 (1882) ("The

exercise of a power to sell by a mortgagee is always carefully

watched, and is to be exercised with careful regard to the

interests of the mortgagor").

    Although it had long been established in law that the

failure to strictly comply with the terms of a mortgage renders

void an otherwise valid foreclosure sale, we gave our decision

"prospective effect only, because the failure of a mortgagee to

provide the mortgagor with the notice of default required by the

mortgage is not a matter of record and, therefore, where there

is a foreclosure sale in a title chain, ascertaining whether

clear record title exists may not be possible."    Pinti, 472

Mass. at 243.     Our concern was that a third party who purchases

property that had once been sold at a foreclosure auction would
                                                                    9


not, through a title search, be able to determine whether the

notice of default strictly complied with the terms of the

mortgage.   It would therefore be nearly impossible to eliminate

the risk that the foreclosure sale would later be declared void

and that the title would be returned to the foreclosed property

owner.   See id.   We presumed that, after our decision in Pinti,

mortgagees "as a general matter" would address this uncertainty

by executing and recording "an affidavit of compliance with the

notice provisions of paragraph 22 that includes a copy of the

notice that was sent to the mortgagor pursuant to that

paragraph."   Id. at 244.   However, we applied our ruling to the

parties in Pinti, id. at 243, citing Eaton v. Federal Nat'l

Mtge. Ass'n, 462 Mass. 569, 589 (2012), and deferred the

question whether our holding "should be applied to any other

class of cases pending on appeal."    Id. at 243 n.25.

    In Galiastro v. Mortgage Elec. Registration Sys., Inc., 467

Mass. 160, 167-170 (2014), we addressed that same issue in a

closely parallel context.    In Eaton, 462 Mass. at 571, we

declared that a foreclosure by power of sale is invalid unless a

foreclosing party holds the mortgage and also either holds the

underlying note or acts on behalf of the note holder.    We

applied this rule to the parties in Eaton, but otherwise gave

the ruling prospective effect only.    Id.   In Galiastro, supra at

168, we extended the benefit of our decision in Eaton to
                                                                    10


litigants who had preserved this issue and whose cases were

pending on appeal at the time that Eaton was decided.     We

declared that "[w]here multiple cases await appellate review on

precisely the same question, it is inequitable for the case

chosen as a vehicle to announce the court's holding to be

singled out as the 'chance beneficiary' of an otherwise

prospective rule."   Galiastro, supra at 167-168, citing United

States v. Johnson, 457 U.S. 537, 555 n.16 (1982), and

Commonwealth v. Pring-Wilson, 448 Mass. 718, 736 (2007).

Limiting the application of prospective rulings to such a

"chance beneficiary" would mean that something as arbitrary as

the speed at which a case is litigated might determine its

outcome, as only the first case raising this issue to reach the

Supreme Judicial Court would get the benefit of the ruling.    It

would also greatly diminish the "incentive to bring challenges

to existing precedent" by depriving similarly situated litigants

"of the benefit for the work and expense involved in challenging

the old rule."   Galiastro, supra at 169, quoting Powers v.

Wilkinson, 399 Mass. 650, 664 (1987).

    The same principles underlying our decision in Galiastro to

extend the Eaton rule to cases pending on appeal cause us to

extend the Pinti rule to cases pending in the trial court where

the Pinti issue was timely and fairly raised before we issued

our decision in Pinti.   In such cases, the homeowner-mortgagors
                                                                     11


are similarly situated to the plaintiffs in Pinti, because they

presented the same arguments in the trial court that the Pinti

plaintiffs presented to this court on appeal.   All that

distinguishes the homeowners in Pinti from the homeowners in

this case is the pace of the litigation.   The summary process

complaint in this case was first filed in June, 2012; the

complaint in Pinti seeking a judgment declaring that the

foreclosure sale was void was filed in January, 2013.      If this

case had proceeded to judgment more promptly in the Housing

Court, this appeal, rather than Pinti, might have been the one

that established the so-called Pinti rule.5

     Having so ruled, we now consider whether the homeowner

defendants in this case timely and fairly raised a Pinti defense

before the issuance of our Pinti decision.    The judge found that

they had, and we conclude that he was not clearly erroneous in

so finding.

     We recognize that the defendants did not specifically

allege that the mortgagee's notice of default failed to strictly

comply with the terms of paragraph 22 of the mortgage until they

filed their cross motion for summary judgment on September 23,

     5
       We recognize that this ruling will increase the impact our
Pinti decision may have on the validity of titles, but we expect
the increase to be modest and that it will simply be part of the
inherent "unevenness [that] is an inevitable consequence of any
change in doctrine." Galiastro v. Mortgage Elec. Registration
Sys., Inc., 467 Mass. 160, 170 (2014), quoting Johnson Controls,
Inc. v. Bowes, 381 Mass. 278, 283 n.4 (1980).
                                                                  12


2015, more than two months after the issuance of our opinion in

Pinti.   But more than three years before that opinion, in June,

2012, they filed an answer as self-represented litigants where

they checked the box proffering as a defense to the eviction

that the plaintiff did not have "superior right to possession of

the premises."6   We need not consider whether the assertion of

this affirmative defense alone was sufficient to give fair

notice of a Pinti defense, because it is apparent from the

plaintiff's memorandum in support of its motion for summary

judgment, which was filed one month before the issuance of our

Pinti decision, that the plaintiff recognized that the

defendants had alleged that the notice of default failed to

comply with the terms of paragraph 22 of the mortgage.   In that

memorandum, the plaintiff argued that it had complied with the

requirements of paragraph 22 and that it would be "irrational

and fundamentally unfair" to declare the foreclosure proceeding

void because of the purported minor differences between the

language of the notice of default and that of the mortgage.

     6
       The full text of the defense, marked box no. 67 on the
answer, states:

          "The plaintiff's case should be dismissed because it
     does not have proper title to the property and therefore
     does not have standing to bring this action and/or cannot
     prove a superior right to possession of the premises.
     Wayne Inv. Corp. v. Abbott, 350 Mass. 775 (1966) (title
     defects can be raised as defense in summary process); G. L.
     c. 239, § 1 (summary process available to plaintiff only if
     foreclosure carried out according to law)."
                                                                    13


Where the plaintiff recognized that the defendants had raised

the Pinti issue as a defense before our Pinti decision, the

judge did not err in finding that the defendants fairly and

timely raised the issue and therefore were entitled to the

benefit of the Pinti decision.

       2.   Obligation of strict compliance.   Having determined

that the defendants are entitled to the benefit of our holding

in Pinti, we must now address whether the notice of default

strictly complied with paragraph 22 of the mortgage.     It did

not.

       Once a borrower has defaulted on a mortgage, G. L. c. 183,

§ 21, authorizes the mortgagee to foreclose and sell the

premises, provided it "first compl[ies] with the terms of the

mortgage and with the statutes relating to the foreclosure of

mortgages by the exercise of the power of sale."      Pinti, 472

Mass. at 232, quoting G. L. c. 183, § 21.      As we explained in

Pinti, supra at 236, "the 'terms of the mortgage' with which

strict compliance is required -- both as a matter of common law

under this court's decisions and under § 21 -- include not only

the provisions in paragraph 22 relating to the foreclosure sale

itself, but also the provisions requiring and prescribing the

preforeclosure notice of default" (footnote omitted).      See

Foster, Hall & Adams Co. v. Sayles, 213 Mass. 319, 322-324

(1913).
                                                                   14


    The notice of default in this case communicated much of

what paragraph 22 requires but fell short in several crucial

respects.   Paragraph 22 requires that the notice "inform [the

borrower] of the right to reinstate after acceleration and the

right to bring a court action to assert the non-existence of a

default or any other defense of [the borrower] to acceleration

of sale."   Despite this language in the plaintiff's own uniform

mortgage instrument, the notice declared that the borrower "may,

if required by law or [the borrower's] loan documents, have the

right to cure the default after the acceleration of the mortgage

payments and prior to the foreclosure sale of [the borrower's]

property if all amounts past due are paid within the time

permitted by law" (emphasis added).   Similarly, the notice

declared that the borrower "may have the right to bring a court

action to assert the non-existence of a default or any other

defense [the borrower] may have" (emphasis added).    We agree

with the judge that this language in the notice "significantly,

and inexcusably, differed from" the language in paragraph 22 of

the mortgage, and "watered . . . down" the rights provided in

that paragraph to the mortgagor homeowner.

    The phrase, "you may, if required by law or your loan

documents, have the right to cure the default after

acceleration," suggests that the right to cure and reinstate is

not available to every mortgagor, and that any such right is
                                                                  15


contingent upon the law or the provisions of other loan

documents.   But paragraph 19 of the mortgage specifically grants

a mortgagor the right to reinstatement after acceleration, and

sets forth the steps required to do so.   This phrase instead

suggests that the homeowner may need to perform legal research

and analysis to discern whether the right to cure and reinstate

is available.

     Similarly, rather than unequivocally inform the borrower of

the right to bring a court action to attempt to prevent a

foreclosure by asserting that there was no default or by

invoking another defense, the notice of default stated that the

borrower may have the right to bring such an action.   Here, too,

the implication is that the right is merely conditional, without

specifying the conditions, and that the mortgagor may not have

the right to file an action in court.   The defendant contends

that it accurately informed borrowers that they "may have" the

right to bring a court action because they would have no such

right if their court action lacked a good faith basis.    But

neither paragraph 22 of the mortgage nor the notice identified a

bad faith exception to this right and we cannot reasonably infer

that a borrower would understand that the "may have" language

referenced such an exception.7


     7
       Because we find that the notice of default was not in
strict compliance with paragraph 22, we need not address the
                                                                   16


     We agree with the judge that, because the Pinti decision

applies to this case and because the notice of default did not

strictly comply with the requirements of paragraph 22 of the

mortgage, the foreclosure sale is void.8

     Conclusion.   The allowance of the defendants' cross motion

for summary judgment, as well as the denials of the plaintiff's

motions for summary judgment and for relief from judgment, are

affirmed.

                                    So ordered.




defendants' contention that the plaintiff waived its argument
that the notice was in strict compliance when it conceded that
it was only in substantial compliance in the memorandum in
support of its motion for summary judgment and at the hearing in
the Housing Court.
     8
       Nothing bars the plaintiff from reinitiating the
foreclosure process with a notice of default that strictly
complies with paragraph 22 of the mortgage.
