Bar News - August 19, 2015
Supreme Court Decision Narrow in Foreclosure Relief Project Case
By: Patricia Gardner
After the five New Hampshire Supreme Court justices were seated to entertain oral argument in the foreclosure appeal of Bergeron v. New York Community Bank on Oct., 15, 2014, Chief Justice Linda Stewart Dalianis smiled and said, “We’ve been waiting for this case.”
The decision would resolve a split of authority at the Superior Court level regarding the ability of an entity other than the lender, such as the Mortgage Electronic Registration System (MERS), to serve as agent or nominee of the lender to foreclose.
More than nine months after oral argument, on July 27, the NH Supreme Court issued its decision, holding that an agent of the note holder may institute foreclosure proceedings under RSA 479:25. In so doing, the justices affirmed the lower court’s lifting of the temporary injunction and dismissal of the action below.
However, the decision was a narrow one, holding only that the appellee had the authority, as agent of the noteholder, based on the language in the mortgage that homeowner Jillian Bergeron of Stratham had signed, to exercise the power of sale in order to foreclose on her home. The Supreme Court opined that: “We need not address whether the defendant could foreclose if the agency relationship was irregular or legitimately challenged by the plaintiff. We also need not decide whether, absent an agency relationship between the note holder and the mortgage holder, a party who holds only the mortgage has the authority to foreclose.”
The question of law was first posed through the NH Foreclosure Relief Project (FRP). Since 2012, New Hampshire has offered homeowners facing foreclosure both free legal assistance and aid from housing counselors. Bergeron turned to this project for the help that led her to the Supreme Court, a path she would not otherwise have been able to travel.
In 2013, Bergeron sought assistance from FRP to try and save her home. FRP is a collaboration of three entities: The Legal Advice & Referral Center (LARC), New Hampshire Legal Assistance (NHLA), and the New Hampshire Bar Association (NHBA).
LARC serves as the initial point of contact for the FRP, providing free legal counsel to self-represented litigants, and in some cases, aiding them in drafting complaints to enjoin foreclosure. If the litigant obtains an initial temporary restraining order stopping the home’s foreclosure, LARC refers the litigant to either NHLA or the NHBA Pro Bono Program for representation by staff attorneys (at NHLA) or volunteer attorneys (by referral and with staff support from the NHBA).
Since 2012, these three legal assistance programs and the state’s network of housing counselors have helped thousands of New Hampshire homeowners face and successfully resolve their foreclosure issues. Most of the assistance is at no cost to the homeowner; the project is funded by a portion of the state’s share of a national settlement with several large financial institutions that were at the center of the mortgage crises. For those New Hampshire residents who do not qualify for free legal assistance, the NHBA can provide a referral for either a reduced-fee or standard-fee attorney.
LARC helped Bergeron obtain an ex parte order, temporarily stopping her home’s foreclosure by New York Community Bank (NYCB). (Editor’s note: Patricia Gardner serves as senior legal counsel at LARC and helped Bergeron with this part of the case.)
Following a referral from LARC, NHLA Foreclosure Project Director Stephanie Bray and staff attorney Dennis Labbe represented Bergeron at the ensuing preliminary injunctive relief hearing. A continuation of the injunction allowed Bergeron to pursue a loan modification application with NYCB. When that was denied, the Superior Court lifted the temporary restraining order and declined Bergeron’s request for a hearing to determine whether NYCB validly held her promissory note, thus entitling NYCB to exercise the statutory power of foreclosure sale.
The NHBA Pro Bono Program then referred Bergeron’s case to Kenneth Murphy, an attorney at Coughlin, Rainboth, Murphy & Lown in Portsmouth. With support from the NHBA Pro Bono staff, Murphy volunteered to represent Bergeron on appeal to the Supreme Court at no charge (see related story).
NHLA filed an amicus curiae brief. Bray and Murphy shared appellate oral argument time. NYCB was represented by Reneau Longoria, of Doonan, Grave & Longoria, in Massachusetts, who declined a request for comment on the decision.
Bray, of NHLA, said the opinion in no way hampers the efforts of FRP. “The decision is focused on the specific language used when the document warehouse MERS is designated as a ‘nominee’ [of the lender],” she said. “The opinion leaves open the issue of who is entitled to enforce the note, or foreclose the mortgage, if MERS is not involved. FRP is still on the forefront of helping homeowners save their homes and attain affordable mortgages.”
LARC Director Connie Rakowsky said the decision is but one of many that will issue as a result of the housing crisis. “Foreclosures may have lessened, but they are steady and still ongoing in New Hampshire,” she said. “The only way to stem the tide is to provide affordable solutions and resources to attain those solutions, such as the FRP program.”
Patricia Gardner practiced privately in the areas of foreclosure and bankruptcy law for 26 years and now serves as senior legal counsel to LARC in Concord.