May 3, 2019
- Whether the balance of the plaintiff’s homestead exemption remained an interest in the property or was extinguished by the foreclosure sale of the second mortgage
The trial court denied Fannie Mae’s motion for summary judgment and granted the plaintiff’s motion for summary judgment in part. Each party filed a motion for reconsideration, which was denied and this appeal followed.
The Court explained the relevant facts as follows: In 2001, the plaintiff’s wife obtained the subject property in Pelham by warranty deed. The deed acknowledged that she was a married person and granted a mortgage on the property. The plaintiff did not sign the initial mortgage. Both the plaintiff and his wife have resided in the property since 2001. The plaintiff’s wife then refinanced the original mortgage and executed a new mortgage (the first mortgage). The plaintiff did not sign the first mortgage. In 2005, the plaintiff granted a second mortgage on the property to a separate mortgagee. Both the plaintiff and his wife signed the second mortgage. The second mortgage was assigned to an entity which then foreclosed in 2014. The foreclosure sale was subject to the first mortgage and then the property was sold to Fannie Mae. In 2016, the plaintiff and his wife received notice that they may be evicted. The plaintiff then commenced this action to establish his homestead right. The plaintiff argued that the foreclosure of the second mortgage did not affect his homestead right because he had not waived the right in the first mortgage. Fannie Mae argued that because the plaintiff waived his homestead interest in the second mortgage, he could not now assert any homestead right.
In partially granting the plaintiff’s motion for summary judgment, the trial court concluded that prior to the execution of the second mortgage, the plaintiff had an unencumbered homestead right. The trial court also concluded that the plaintiff’s signature was sufficient to waive his homestead right relative to the second mortgage, which was only to the extent necessary to enforce the second mortgage.
The Court conducted a de novo review and considered the evidence in the light most favorable to each party in its capacity as the nonmoving party.
The Court affirmed the trial court ruling that at foreclosure, the plaintiff’s homestead right had priority over the first mortgage. The plaintiff had waived his homestead right as to the second mortgage. The court concluded that the balance of the plaintiff’s homestead exemption remained an interest in the property and was not extinguished by the foreclosure sale of the second mortgage. The Court also affirmed the trial court conclusion that the plaintiff waived his homestead right only to the extent necessary to enforce the second mortgage. The Court concluded that the plaintiff’s present homestead interest is the difference between $120,000 and the amount owed on the second mortgage note at the time of the foreclosure sale. The Court stated that its decision does nothing more than recognize that the remainder of the plaintiff’s homestead interest continues to exist in the property, and that in order to clear that interest from its title, Fannie Mae must either pay the plaintiff its value or partition the property.
Robert Shephard, Smith-Weiss Shepard, Nashua, Tanya Spony (on the brief), for the plaintiff. Jonathan Flagg, Flagg Law, Portsmouth for the defendant.