WESTPORT, CT, Dec. 8, 2011 – A recent Connecticut Supreme Court decision will make it more difficult for Connecticut mortgage lenders to foreclose. “This decision adds a significant tool for those of us defending clients against foreclosure,” points out Christopher Brown, a foreclosure defense attorney who represented the borrower in this case. He is a named partner in the Westport law firm of Begos, Brown & Green LLP.
The case involves the question of which institution is allowed to start legal proceedings to foreclose on a home. “Until this decision, lenders believed they had the right to foreclose merely by demonstrating that they were the ‘holders’ of mortgage notes. In legal terms, the holder generally means the institution has possession of the promissory note,” says Brown. “But, possession does not equate to ownership under the law. That’s an important distinction and this decision makes it clear that it is a critical one. It says that only the owner of the debt has the right to foreclose on the mortgage. It also says that the borrower can force the lender to prove its ownership of the loan. This is significant because many foreclosure lawsuits are brought by ‘holders’ who do not own the debt. For example, in many cases where Fannie Mae and Freddie Mac own the debt, the foreclosure lawsuits are brought by mortgage servicers. They only possess the note. They do not own it.”
What does this mean to those threatened with foreclosure? If the wrong entity files the foreclosure, it cannot go forward. “This decision confirms that if the party that started the lawsuit cannot prove ownership, the case must be dismissed,” says Brown. “Those cases will need to be re-started by the true owners and these institutions sometimes cannot be found or don’t want to come forward.”