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FNMA Mortgage Rescissions PDF Print E-mail
TO:        Massachusetts Agents and Approved Attorneys
FROM:  Underwriting Department
DATE:   February 27, 2009
RE:         FNMA Mortgage Rescissions
There have been a number of reports that recent title exams have turned up recorded instruments similar to those attached hereto (Click here to download):
1.)    Foreclosure Deed to FNMA of property located at 39 Topsfield Road, Ipswich, MA., dated June 4, 2008, recorded with Essex South Deeds in Book 27835, Page 174 on June 9, 2008;
2.)    Revival and Reaffirmation Agreement between the Mortgagor whose interest was foreclosed and the original Mortgagee, dated November 7, 2008 and recorded with said Deeds on February 4, 2009.  This Agreement recites that FNMA was the grantee of the prior recorded Foreclosure Deed and the parties have agreed " rescind the sale of the Property."
3.)    Release Deed of Equity of Redemption from FNMA back to the original Mortgagor, dated December 18, 2008 and recorded on February 4, 2009.  This instrument states:  "This deed is intended to grant to the grantees the equity of redemption which was foreclosed on by deed recorded with the Essex County (South District) Registry of Deeds in Book 27835, Page 174.  The purpose of this deed is to rescind the foreclosure of the property located at 39 Topsfield Road, Ipswich, Massachusetts."  This instrument also recites that the premises are again subject to the mortgage that had been foreclosed, and in this case, a junior mortgage which had been extinguished by the foreclosure.
It is our understanding that these transactions are not entered into pursuant to a formal program, but are structured informally by FNMA on a case-by-case basis.
We believe that unless there is a defect in the foreclosure proceedings, these attempted foreclosure rescissions are questionable, especially where a Foreclosure Deed has been executed and recorded.  See Outpost Café, Inc. v. Fairhaven Savings Bank, et al., 3 Mass.App.Ct. 1, 322 N.E.2d 183 (1975); In re Crichlow, 322 B.R. 229 (Bankr.D.Mass., 2004).
Therefore, please decline any requests to issue policies insuring either that title is vested in the original mortgagors as a result of recording these instruments, or that these "reaffirmed" mortgages are valid and effective.  Please contact your underwriter if you have any questions about these transactions or wish to discuss them further.
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