On June 22nd, 2012 the Massachusetts supreme court ruled on a very simple principle, that is to say a foreclosure by sale requires the foreclosing mortgagee, at the time of the sale, to hold both the mortgage and the underlying mortgage note. the Case is Henrietta Eaton vs. Federal National Mortgage Association.
This may seem simple enough to the casual reader, except virtually no entities foreclosing on securitized mortgages in Massachusetts or elsewhere in the last five years (when the question has been especially relevant) possessed both of these items.
In January the Massachusetts supreme judicial court held in US Bank National Association vs. Antonio Ibanez that a note holder may not foreclose on a property in order to redeem a debt, if they are not also the holder of a valid mortgage (that is to say also with a valid assignment). We outlined the details of this case and its implications in our article "Ibanez – Denying the Antecedent, Suppressing the Evidence and one big fat Red Herring" on January 11th, 2011.
The recent decision by the Massachusetts Supreme Judicial court helped focus a few important questions on the foreclosure crisis in America, but it is also being used as a Red Herring, amongst other things, by the American Securitization Forum and their Bank owners. The Massachusetts land court decision, which was affirmed by the Supreme Judicial Court were correct, but only addressed a narrow specter of the foreclosure crisis in our country and the underlying violations of long standing property law. The case does point however to much more fundamental issues.