Tag: Massachusetts

1
Massachusetts Supreme Judicial Court Holds Passive Debt Buyers Are Not Debt Collectors Under Massachusetts Law
2
Massachusetts issues guidelines for using third-party robo-advisers
3
A Guaranty Is Only As Good As The Person Who Signs It: Enforcing Commercial Lending Guaranties In Massachusetts
4
Massachusetts Supreme Judicial Court Rejects Municipal Foreclosure Ordinances
5
Commonwealth of Massachusetts v. FHFA: Fremont Meets The Federal Government
6
The Massachusetts Supreme Judicial Court Issues Its Long-Anticipated Eaton Decision
7
MERS and Foreclosure Law in Massachusetts: Culhane v. Aurora Loan Services

Massachusetts Supreme Judicial Court Holds Passive Debt Buyers Are Not Debt Collectors Under Massachusetts Law

By: Sean R. Higgins and Matthew N. Lowe

The Massachusetts Supreme Judicial Court recently held in Dorrian v. LVNV Funding, LLC,[1] that “passive debt buyers” are not “debt collectors” required to be licensed under the Massachusetts Fair Debt Collection Practices Act[2] (“MDCPA”).

Dorrian is a class action lawsuit filed by borrowers in default who alleged that defendant LVNV Funding, LLC (“LVNV”) was operating as a debt collector without being licensed under the MDCPA.[3]  Notably, the plaintiffs did not sue the third-party LVNV contracted with to handle all collection and servicing, which was licensed as a debt collector under the MDCPA.  The trial court certified the class and granted summary judgment in the borrowers’ favor on their claims that LVNV violated the MDCPA by operating as an unlicensed debt collector.[4]

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Massachusetts issues guidelines for using third-party robo-advisers

By Susan P. Altman and C. Todd Gibson

In April 2016, the Massachusetts Securities Division issued a policy statement with respect to the fiduciary obligations of state-registered advisers providing robo-advice. The MSD has now issued further regulatory guidance in a new Policy Statement with respect to the use of third-party robo-advisers by state-registered investment advisers. The MSD noted the significant growth in popularity of third-party robo-advisers and the increasing number of state-registered investment advisers working with third-party robo-advisers.

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A Guaranty Is Only As Good As The Person Who Signs It: Enforcing Commercial Lending Guaranties In Massachusetts

By: Robert W. Sparkes, III and David A. Mawhinney

Guaranties are common practice in the commercial lending industry. Typically, the borrower is a small corporation, limited liability company, or similar entity that is thinly capitalized with few (likely encumbered) assets. Under these circumstances, the borrower’s promise to pay a debt is cold comfort to a commercial lender in the event of a default, where its only source of recovery is likely to be the collateral it holds. For this reason, commercial lenders often condition loans not only on a security interest in the borrower’s property, but also on a separate, individual guaranty agreement executed by a third party, usually the principals of the corporate borrower. Such guaranties provide another avenue through which commercial lenders may recover loan amounts and damages due to the borrower’s default.

To read the full alert, click here.

Massachusetts Supreme Judicial Court Rejects Municipal Foreclosure Ordinances

By: Gregory N. Blase, David D. Christensen, Matthew N. Lowe

Can a Massachusetts municipality impose ordinances on banks that are more onerous than existing statewide law? In a recent landmark decision, the Massachusetts Supreme Judicial Court (“SJC”) answered “no.” In Easthampton Savings Bank v. City of Springfield,[1] the SJC held that two ordinances, through which the City of Springfield (“Springfield”) sought to make foreclosures more difficult, were preempted by the Massachusetts Constitution. The Easthampton Savings Bank decision should serve to curtail municipalities’ attempts to impose regulations that are more stringent than those imposed by statewide law and—in welcome news to banks and investors—restore a degree of consistency in conducting foreclosures in Massachusetts.

To read the full alert, click here.

Commonwealth of Massachusetts v. FHFA: Fremont Meets The Federal Government

By: Irene C. Freidel

On June 2, 2014, the Commonwealth of Massachusetts sued the Federal Housing Finance Agency (FHFA), Fannie Mae, and Freddie Mac in state court, under Massachusetts’ consumer protection statute (“Chapter 93A”) to force them to sell foreclosed properties to non-profit organizations at fair market value, so that the properties can then be re-sold or leased back to the former homeowner. See Commonwealth of Massachusetts v. Federal Housing Finance Agency, et al., C.A. No. 14-1763 (June 2, 2014). Among other things, the lawsuit seeks a declaration that the GSEs’ current anti-fraud guidelines violate Massachusetts foreclosure law (M.G.L. c. 244, § 35C(h)), an order requiring property sales to non-profits in specific transactions, an injunction to prevent the GSEs from refusing to adhere to Massachusetts law, and an award of penalties of up to $5,000 for each transaction that the court determines constituted an unfair and deceptive practice under state law. The lawsuit follows a series of communications between the Massachusetts Attorney General and FHFA beginning in 2012 in which the state has demanded that FHFA direct the GSEs to change their anti-fraud “arms-length” requirements that apply to short sales and REO transactions. Read More

The Massachusetts Supreme Judicial Court Issues Its Long-Anticipated Eaton Decision

By: Phoebe S. Winder

In a long-anticipated decision, the Massachusetts Supreme Judicial Court (“SJC”) ruled in Eaton v. Federal National Mortgage Ass’n, 2012 WL 2349008 (June 22, 2012) (“Eaton”) that when conducting a non-judicial foreclosure in Massachusetts, a foreclosing entity must not only hold the mortgage – it also must hold the note or be authorized to act on behalf of the note holder. But if the goal of consumer advocates was to void a large volume of foreclosures, then they failed in that goal, and Eaton should be seen as a victory for those who have foreclosed, or who are seeking to foreclose, on mortgage loans in Massachusetts. Read More

MERS and Foreclosure Law in Massachusetts: Culhane v. Aurora Loan Services

By: Andrew C. Glass, Gregory N. Blase, Roger L. Smerage

A Massachusetts federal court recently confirmed MERS’s ability to assign mortgages under Massachusetts law and approved MERS’s practices in doing so.

In Culhane v. Aurora Loan Services, — F. Supp. 2d —-, 2011 WL 5925525 (D. Mass. Nov. 28, 2011), a borrower sued her loan servicer to prevent foreclosure. The court granted summary judgment for the servicer, addressing two principal issues. First, the court examined whether Massachusetts law requires that the same entity hold both the note and mortgage before initiating the foreclosure process. Predicting how the Massachusetts Supreme Judicial Court may rule in a pending appeal, Eaton v. Federal National Mortgage Association, SJC-11041 (argued Oct. 3, 2011), the federal court concluded that under Massachusetts law, the mortgagee must either be the noteholder, or the servicer of the noteholder acting pursuant to authority from the noteholder, to foreclose on property pursuant to the power of sale. Read More

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