Business

Sigh of relief for banks

Massachusetts’s highest court ruled that a foreclosure sale in the state can be valid even when the entity foreclosing on the home doesn’t hold the mortgage note.

The state’s Supreme Judicial Court reversed a lower court ruling, saying it is enough that the foreclosing party is acting on behalf of the note holder, according to a decision yesterday involving a Fannie Mae foreclosure.

The case involves a homeowner, Henrietta Eaton, who claimed the foreclosure on her home in the Roslindale section of Boston was invalid because the mortgage servicer didn’t hold the mortgage note and lacked the authority to foreclose.

The lower court said a foreclosing entity at the time of the sale must hold both the mortgage and the underlying mortgage note. That court blocked Eaton’s eviction from the home.

A lawyer for Eaton couldn’t be reached for comment.

The mortgage servicer, Green Tree Servicing, was the highest bidder at Eaton’s foreclosure auction and transferred the property to Fannie Mae.

The Supreme Judicial Court remanded the case to superior court and said Eaton could argue that Green Tree neither held the note nor acted on behalf of the note holder.