Score One for the Mortgage Industry
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Mortgage lenders secured a victory in federal court in Boston recently, with the partial reversal of a bankruptcy court decision from last year.
Last year the bankruptcy court in Boston ruled in In re Jaaskelainen that because a mortgage lender didn’t give both borrowers (a husband and wife) two copies each of the notice of their right to cancel the transaction within three days, the borrowers had the benefit of the extended right to cancel the loan (up to four years in Massachusetts).
Approximately a year and a half into their mortgage, faced with an impending foreclosure, the borrowers sent their lender a notice that they were exercising this extended right to cancel, and soon thereafter filed bankruptcy. The bankruptcy court ruled that the borrowers had validly exercised their extended right to cancel, and the mortgage lien against their home was gone. The court went on to say that because the mortgage debt was now “unsecured,” the borrowers did not have to meet their “tender” obligation, i.e., they did not have to pay back any portion of the debt. It is this last piece of the decision that was overturned last month.
In a May 28, 2009, decision, the federal district court upheld the Jaaskelainens’ rescission of their mortgage, but reversed the elimination of their “tender” obligation. There are several ways this case could play out, including an appeal to the U.S. Court of Appeals for the First Circuit, or further proceedings in the bankruptcy court in Boston. Our office will continue to follow the developments in this case and keep our clients updated. If you have questions about your mortgage, contact us at (781) 297-0005 or olivier@bierlaw.com.