Sunday, March 31, 2013

FORECLOSURE: Homeowner's legal challenges should occur BEFORE the foreclosure sale auction of their home occurs, per the Federal Court.


In a recent opinion issued by the Federal District Court in New Hampshire, Chief Judge Laplante held that challenges to the foreclosure must occur BEFORE the foreclosure sale is held, relying upon NH R.S.A. 479:25,II.   SeeCalef v. Citibank, N.A. et. al., CV-11-526 (D.N.H. 2/21/13).

Click here for the full text of the opinion, which can be found on the Court's web site:


The Calef case involved the federal court sitting in diversity, applying the state law as the court so interpreted it.  In so ruling, the court relied upon Gordonville Corp. N.V. v. LR1-A Ltd. P'ship, 151 N.H. 371, 377 (2004);Murphy V. Fin. Dev. Corp., 126 N.H. 536, 540 (1985); People's Utd. Bank. v. Mtn. Home Developers of Sunapee, LLC, 858 F. Supp. 2d 162, 167-68 (D.N.H. 2012).  Having failed to move to enjoin the foreclosure sale before launching such legal challenges, Calef (the home owner being foreclosed upon) was barred from doing so, after the foreclosure sale.  Fuller v. Fed. Nat'l Mortg.Ass'n, No. 218-2011-CV-00668, slip op. at 4-6 (N.H. Super. Ct. Oct 2, 2012)(Section 479:25, II barred challenge to foreclosure based on alleged invalidity of assignment where plaintiffs had notice of assignment well before sale);Baril v. JP  Morgan Chase Bank, N.A., No. 218-2010-CV-501, slip op. at 4-6 (N.H. Super. Ct. July 20, 2011)(similar); Fed Nat'l Mortg. Ass'n v. Goyal, No. 09-C-0543, 2011 WL 4403839 (N.H. Super. Ct. Feb 25, 2011)(similar).

Further, as the court previously ruled in LeDoux v. JP Morgan Chase, N.A., 2012 D.N.H. 194, 13-15, the borrower did not have standing to object to the transfer of a note on grounds that would merely render the transfer "voidable" as opposed to "void", such as a challenge to the mortgagee's pooling and servicing agreement.

In Calef, the plaintiff/pro se challenged the foreclosure sale of his home, afterthe foreclosure sale auction of his home occurred. The Court held that insofar as Calef's claims arise from alleged infirmities in the assignment of his mortgage to the foreclosing entity, New Hampshire state law preclude him for pursuing those claims because he failed to file a petition to enjoin the foreclosure sale prior the the sale occurring. Here, the owner of the home allegedly defaulted, and was sent a foreclosure notice by the mortgagee's counsel, the Harmon Law firm.  In the process, MERS assigned its interest in the mortgage to Citibank and copied Calef on the assignment.  Defendant/mortgagee characterized Calef's suit as a challenge to its pre-foreclosure conduct  (i.e. claims that the assignment of mortgage from MERS to Citibank was invalid) and claims related to post-foreclosure sale conduct (allegations that foreclosure deed and affidavit were  invalid). 

Further, the court found that even where a foreclosure deed and affidavit are not recorded at all, that does not affect the validity of the foreclosure sale as applicable to the mortgagor (meaning, the home owner).  "It follows that where the recorded deed and affidavit are deficient in some respect . . .  that, too, is a matter of no concern to the mortgagor." Calef, at p. 13. 

As such, summary judgment was granted to the foreclosing entity.

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