News - May 22, 2019

The Massachusetts Mortgage Bankers Association Files Amicus Brief in Thompson v. JPMorgan Chase Bank, N.A.

Boston, Mass. – Wednesday, May 22, 2019 - The Massachusetts Mortgage Bankers Association (MMBA), the largest mortgage association in New England, announces it filed an amicus brief in Thompson v. JPMorgan Chase Bank, N.A., a U.S. Court of Appeals decision handed down by the First Circuit. The Thompson case involved the notice of default sent to the Thompsons (the borrowers) by JPMorgan Chase Bank when the borrowers failed to make their mortgage loan payments. The Court held that the notice was “potentially deceptive” and declared the foreclosure invalid.

"This case involves the interpretation of a foreclosure notice requirement, often referred to as ‘paragraph 22’ because the notice is found in paragraph 22 of most residential mortgages. It requires a mortgagee to provide a borrower with several disclosures prior to foreclosure, including the right to cure and the right to reinstate the loan after acceleration," said Debbie Sousa, Executive Director of the MMBA. "We took this action in response to the enormously consequential decision the Court issued about the notice requirement. This case has the clear potential to create uncertainty and hardship for mortgage lenders in the Commonwealth by calling into question the validity of countless pending and previously completed foreclosures."

In Thompson, the First Circuit ruled that the notice of default and right to cure potentially misled the borrowers regarding the precise amount of time they had to reinstate the loan prior to foreclosure. The content of the Thompson default notices exactly tracked the disclosures contained in paragraph 22 of the mortgage and also included the mandatory Notice of Right to Cure a Default (“Cure Notice”) promulgated by the MA Division of Banks (“DOB”). The DOB notice informed the borrowers that the foreclosure could be avoided by paying the total past-due amount before a foreclosure sale took place. This conflicted with a more restrictive limitation on the right to reinstate contained in paragraph 19 of the mortgage, which provided that payment had to be made at least five days before the foreclosure sale date. Despite never having attempted to reinstate the loan, the borrowers claimed that the Cure Notice’s failure to disclose the five-day requirement rendered the notice confusing and potentially deceptive.

The amicus brief contends that this decision frustrates the long-standing custom and practice of Massachusetts lenders giving homeowners every opportunity to avoid foreclosure, including the ability to reinstate their loan up until the foreclosure sale. It further states that forcing lenders to cut off this right at an earlier time would be unfair to all involved and that a lender’s decision to waive this limitation in favor of a more consumer friendly option should not be construed as deceptive. The brief also outlines the chaos the Thompson decision will create for MMBA members and their customers who will likely be unable to buy, sell, finance or refinance homes with an affected foreclosure in the chain of title. The amicus concludes by asking the Court to avoid making the MMBA’s members and their customers the inadvertent casualties of this erroneous decision.

In filing the amicus brief, the MMBA joined a host of concerned organizations including Fannie Mae, the Mortgage Bankers’ Association, the Massachusetts Real Estate Bar Association and the Massachusetts Bankers Association.

About the Massachusetts Mortgage Bankers Association
Founded in 1976, the Massachusetts Mortgage Bankers Association (MMBA) is the largest mortgage association in New England and is recognized as one of the most successful in the country. The MMBA’s more than 225 corporate members include lending institutions (banks, credit unions, mortgage lenders and mortgage brokers) and ancillary companies that facilitate mortgage transactions throughout the state. The MMBA serves as a trusted commentator and advocate on public policy and provides educational training and networking opportunities for its members. For more information, visit www.massmba.com.

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