This is not the time to move to a system of judicial foreclosure in Massachusetts. The current system of non-judicial foreclosures has worked as it should, allowing foreclosures to proceed independent of the courts, yet simultaneously allowing judicial intervention where appropriate to protect the rights of borrowers from improper practices.
Although foreclosure requires the knowledge and experience of an attorney, the process itself is largely formulaic. There are notices that must be sent and legal advertisements that must be drafted and published, each on particular dates and at particular intervals, and there is a process that must be followed for the entry and for the foreclosure public auction.
For centuries, Massachusetts attorneys have handled this process properly while the courts have stood available to resolve disputes only when necessary. This system has conserved judicial resources for disputes that truly require judicial intervention. If the Commonwealth now adopted a system of judicial foreclosure, the regular would become the routine, with courts inevitably treating the process as an administrative one and focusing on the process itself rather than the substance. The cases would be handled by clerks with minimal involvement by judges. There is no reason to believe that the administrative process of judicial foreclosure would enhance borrowers’ rights. Indeed, the opposite is true: The influential foreclosure decisions of the Massachusetts courts (e.g., U.S. Bank Nat. Ass’n v. Ibanez, 458 Mass. 637 (2011), Bevilacqua v. Rodriguez, 460 Mass. 762 (2011), Eaton v. Federal Nat’l Mortgage Ass’n, 462 Mass. 569 (2011), and their progeny), have resulted not from judicial foreclosures, but from a system that allowed the foreclosures to receive the particular attention of a judge in a singular case.
Conversely, there is grave concern that the courts do not have the resources to handle the volume of judicial foreclosure cases. The Land Court and the Superior Court already are taxed by their existing caseloads. And the recent example of the Servicemembers’ Civil Relief Act—which required the Land Court to review and approve certain foreclosures—has shown how the increased workload has led to delays in the completion of foreclosures.
Although foreclosures are symptoms (not causes) of an economic downturn, systematic delays in foreclosure beyond those necessary to protect the rights of borrowers can aggravate an economic downturn. The presence of large numbers of homes in foreclosure has an adverse effect on communities, where the homes may sit vacant or in disrepair for an extended period of time. Cities and towns that are already economically disadvantaged are likely to suffer even more. The system of judicial foreclosure in Florida is instructive. There, the judicial foreclosure process became so bogged down that delays as long as three years became the norm. The courts could not handle the volume of cases, so cases waited for hearing dates. Values remained depressed, condominium associations struggled to collect sufficient revenues, and the overall economy struggled. It is not a coincidence that the Massachusetts real estate market has improved dramatically from the depths of the recession, while Florida brokers are still complaining and newspapers are still writing about the adverse effect of distressed real estate and foreclosures.
Massachusetts has traditionally been in the forefront of protecting its citizens, and it remains so. In the wake of the scandals regarding predatory lending and failures in the secondary mortgage market, the General Court enacted significant changes to Mass. G.L. c.244, § § 35A, 35B, and 35C, that protect borrowers in pre-foreclosure contexts to a degree not found in many other states. We have a system in place that has worked, and has mostly respected the rights of borrowers. Where that has not happened, our courts have been vigilant in protecting those rights. Judicial foreclosure will strain our courts and create delays that harm the economy and real estate market. There is no evidence that a change in the foreclosure process will protect the rights of borrowers to any greater extent than the existing process. Where our existing system of non-judicial foreclosure is not broken, there is no need to fix it.
Robert J. Moriarty, Jr. is a founding partner in Marsh, Moriarty, Ontell & Golder, P.C. and has concentrated his practice in commercial and residential real estate. He is a frequent lecturer on complex title matters and is a former president of REBA.