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The PINTI Decision and Underwriting Guidelines PDF Print E-mail

DATE:       October 30, 2015

TO:            Massachusetts Agents and Approved Attorneys

FROM:      Massachusetts Underwriting Department

 

The PINTI Decision and Underwriting Guidelines

This memorandum supplements our Company’s existing foreclosure underwriting guidelines in light of the recent Supreme Judicial Court’s decision in Pinti v. Emigrant Mortgage Company,  Inc. , 472 Mass. 226, 33 N.E.3d 1213 (2015) (“Pinti”).

On August 21, 2015, our office distributed a memorandum which discussed the Pinti case and decision at length.  The ruling by the court that the failure to strictly comply with the requirements in the mortgage that was being foreclosed will void a foreclosure has compelled our Company to issue the following underwriting requirements. 

As suggested by the court in its decision, compliance with Pinti can be demonstrated by the recording of an affidavit  evidencing strict compliance with those terms of the mortgage necessary to validly exercise the power of sale (for example, the giving of a notice of breach and acceleration).  Consequently, in order for our Company to consider insuring a foreclosure that is impacted by Pinti, the following guidelines must be adhered to:

1.     Effective Date.

The Pinti decision was issued on July 17th, 2015.  For any foreclosures occurring on or after this date, a Pinti Affidavit of either a) non-applicability or b) compliance must be obtained.

Because Pinti applies prospectively, it governs any foreclosure in which a notice of default was sent on or after the decision’s date, i.e. July 17th, 2015. 

If a notice of default was sent prior to July 17th, 2015, then Pinti does not apply.  Consequently, an Affidavit of Non-Applicability, executed by a “Proper Affiant” as set forth in Section 4 below, must be obtained and recorded.  In the alternative, a statement of non-applicability can be included in any other affidavit recorded in connection with the foreclosure procedure.

If Pinti does apply, then all of the following requirements must be satisfied. 

2.     Form of Affidavit.

An Affidavit pursuant to M.G.L. c. 183, § 5B is preferred but not required.

 It must be executed under the pains and penalties of perjury and the notary clause must be in the form of a jurat and not an acknowledgment.

3.     Required documentation.

If Pinti applies, a copy of any notice required by the mortgage necessary to exercise the power of sale must be obtained. The notice(s) must be compared with the requirements of the subject mortgage and compliance with those requirements must be ascertained.  The notice(s) should not be recorded with the Affidavit of Compliance, but instead kept by the policy issuing agent in her or his file.

4.     Proper Affiant.

The notice(s) must also be examined to ensure they were given by the proper entity as required by the terms of the mortgage.  Once it is determined that the notice(s) were given by the proper entity, the Affidavit of Compliance must be executed by one of the following:

(a) The person who sent the notice(s);

(b) Another person from the entity who sent the notice(s);

(c) An officer or employee of the foreclosing mortgagee, if the foreclosing mortgagee is different than the entity who sent the notice(s); or

(d) A duly authorized agent of the foreclosing mortgagee.

 

The capacity of the affiant must be found within M.G.L c. 183, § 54B.

The affiant shall set forth in the Affidavit of Compliance a detailed description of the basis of affiant's personal knowledge of the statements contained therein.

5.     Content of Pinti Affidavit.

The Pinti court focused on the specific form of notice that was presented before it: a notice of breach and acceleration pursuant to paragraph 22 of the subject mortgage and the need to strictly comply with its requirements.  However, the court made it equally clear that any conditions precedent to the exercise of the power of sale in the mortgage must be satisfied.  Consequently, a Pinti Affidavit of Compliance must address more than just the notice of breach and acceleration.  It should state that all notices, requirements and conditions precedent were made and/or satisfied in strict compliance with the terms of the mortgage, including but not limited to a notice of breach and acceleration.

6.     Recording of Affidavit.

The Affidavit may be executed at any time after compliance with Pinti is determined, and recorded prior to or with the other foreclosure sale documents.

7.  Registered Land.

As of this date, the Land Court has not issued guidelines in response to Pinti.  Nonetheless, affidavits compliant with this memorandum should be presented for registration.

8.  Issuing the Policy.

If an Affidavit of Non-Applicability or an Affidavit of Compliance is obtained and recorded in complete conformity with the above underwriting requirements, an owner’s or loan policy may be issued without exception for any matters arising from Pinti. 

If an Affidavit of Non-Applicability or an Affidavit of Compliance is obtained but is NOT in complete conformity with the above underwriting requirements, the proposed Affidavit must be submitted to a Company underwriter for review.  The Affidavit may be so insufficient that the Company will decline to insure.  However, if it is determined that the Affidavit is adequately sufficient, an owner’s policy may be issued with the following numbered Exception and Note:

“__.   Unmarketability of the Title by reason of an assertion that there is insufficient record evidence that all notices, requirements, and conditions precedent necessary to exercise the power of sale were made and/or satisfied in strict compliance with the terms of the foreclosed mortgage recorded in the __________ County Registry of Deeds in Book ____, Page ____ or filed in the _________ County Land Registration Office as Document No. _________.  NOTE:  The Company insures the Insured against loss or damage sustained by the Insured by reason of such assertion of unmarketability.  Marketability of the Title, with respect to this Exception, shall be determined by the willingness of this Company or any other title insurance carrier licensed to transact business in the Commonwealth of Massachusetts to insure the Title to the Land as set forth herein, at then existing title insurance rates.  The Company will, if requested, issue title insurance policies insuring successor owners, mortgagees and/or lessees including this Exception and this Note subject to the provisions hereof.  The issuance of such policies is subject to: (a) payment of then prevailing title insurance premiums, (b) matters arising subsequent to the date of this policy, and (c) compliance with the Company’s underwriting guidelines in effect at the time the request for such policies is made.  If a change in the laws or regulations of the Commonwealth of Massachusetts prohibits the Company from issuing any of the coverages contained in this policy, the Company shall not be required to issue such coverage.  In the event a claim has been made or is pending against the Company, or a defect in the Title has been discovered, which is unrelated to this Exception, the Company shall not be required to issue insurance as to such claim or defect.”

This review will also determine if it is necessary to include the above Exception and Note in any requested loan policy.

The Pinti decision is a reminder of the inherent risks of insuring a title in which the foreclosed mortgagor(s) or related parties are still in possession of the subject property. Our Company will not insure a title arising from a foreclosure in which the mortgagor(s) or related parties are still in possession of the property.  You must obtain an affidavit from the seller of a foreclosed property that the mortgagor(s) or related parties are no longer in possession of the property prior to issuing our Company’s policy(ies) of title insurance.

As a result of court decisions and statutory changes, foreclosure law continues to evolve.  As more changes occur, our underwriting requirements may need to adapt as well.  We will continue to update you on these developments, but we urge you to also stay vigilant in this area of practice.

If you have any questions or concerns about foreclosure proceedings in any transaction you are being asked to insure, do not hesitate to contact our underwriting department.

 
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