WEBVTT
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S-J-C- one, two, seven, nine, eight.
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Mark R. Thompson and another V J.P. Morgan Chase Bank, N-A.
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(papers shuffling)
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Mr. Shonefield, good morning.
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Morning, Your Honor (clearing throat).
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Mr. Chief Justice, may it please the court.
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As this court explained in Pinti, in order to exercise
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the power of sale and non-judicially foreclose
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a lender must strictly comply with the notice requirements
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of Paragraph 22 in the standard G-S-E mortgage.
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Paragraph 22 requires a lender to notify a borrower
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in default that she has the right to reinstate her loan
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after acceleration; Chase did that here.
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They told the Thompson's using the precise words
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of Paragraph 22, that they had the right
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to reinstate the loan after acceleration.
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Chase provided accurate notice, required by Paragraph 22
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and so did everything this Court
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has required to exercise the power of sale.
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That's the critical distinction between this case
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and Pinti and it should end the Court's analysis.
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In Pinti...
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May I ask you questions since I'm a simple soul?
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American Bankers Association Amicus says,
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"This isn't so complicated,
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there is a (mumbles) regulation, which obliges
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the lender to send this particular notice."
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Which tells the borrower that you can still avoid
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foreclosure by paying the total past due amount
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before foreclosure sale takes place.
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The total due past amount is set forth in that notice.
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Does that not mean that applicable law
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says that if that person
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hands over the past due amount before foreclosure,
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the bank is obligated under applicable law to accept it?
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I think that's exactly right and certainly that's Chase's
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practice here and as reflected in other Amicus briefs,
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that's the practice industry wide.
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If someone is prepared to tender the amount to reinstate
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a loan, the lender has no reason to foreclose on the home.
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We're talking about whether not has reason,
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I'm saying that, the applicable law would obligate you,
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you are arguing that, "Oh, you're good fellows
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and you would as a matter of grace, do it."
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The American Bank Association at least, as I read it says,
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it's not a matter of grace, under applicable law
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you have told the lender, pursuant to this required notice
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that he or she may do it and if he or she doesn't,
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then foreclosure is avoided and therefore applicable law
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obliges you to do it.
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And I don't disagree with that.
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And I think my only point is that practice
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is consistent with it.
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It's not like there are reports of lenders
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evading the obligation as reflected in the 5604 notice.
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This is industry-wide practice and so however the Court
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wants to reach the conclusion that this wasn't inaccurate
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or deceptive, if it agrees that that's the legal standard
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and I dispute that it is.
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There's nothing deceptive about telling someone
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that they have a right, that they in fact have.
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So if we've declared that their applicable law
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is that, you can hand over the money before foreclosure
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and that will forgive you, that will not forgive you
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but that will mean that the foreclosure will not happen
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then there is no deception in the notice because the notice
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is a reflection of what in fact, applicable law requires.
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I think that's...
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Even though it's more than what the contract,
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the mortgage provides.
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I don't think it's necessarily more than what the mortgage
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provides, so I agree with the premise of your question...
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The mortgage may allow you to do it...
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Exactly.
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But applicable law would oblige you to do it,
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require you to do it.
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That's precisely right, Your Honor.
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I do think however, just to take a step back
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to the legal question.
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The way the First Circuit Panel interpreted this Court's
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decision in Pinti, there's a broad prohibition
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on saying anything that's inaccurate or deceptive
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in your foreclosure-related notices notwithstanding...
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Is the disconnect in the five days window?
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I'm not sure I understand the question.
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Disconnect between the regulation and the mortgage?
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Yeah, I think that's exactly right!
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What the First Circuit perceived to be intention
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was the disclosure in the five day notice.
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That says, "That you can still avoid foreclosure
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by paying the total past due amount before foreclosure
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sale takes place, and you're right under 19,
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Paragraph 19 of the mortgage to reinstate your loan
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up until the earliest of the five days before."
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Paragraph 12 of the mortgage and I think this
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was what Chief Justice Gants was alluding to,
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does allow the lender to extend the time for repayment.
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And as a matter of practice, Chase
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and other lenders do in fact do that.
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But to return to the question of Pinti
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because on a certified question to this Court,
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I think it's implicit in the First Circuit's ruling
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that there's at least a lack of clarity on this question.
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Pinti requires that a lender before exercising the power
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of sale, make required and accurate disclosures.
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And I think there's no dispute in this case
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that what Chase provided, pursuant to Paragraph 22,
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was both required and accurate.
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It was required to disclose the existence of the right
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to reinstate and I think it's important in this connection
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to make two observations.
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The first one is: the right to reinstate, is in fact
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conditional as Paragraph 19 makes clear.
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There are conditions imposed on it.
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Paragraph 22 nonetheless, requires you to tell them
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that they have the right to reinstate.
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So Chase did that here.
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They told them that they have the right to reinstate
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notwithstanding that there were certain conditions on that.
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And I think the other thing to observe
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in this connection is...
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If you don't want to accept or if you're reluctant
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to accept the notion that you were obligated
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as a matter of law to accept it and we're stuck
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with you wanna pursue the Pinti argument.
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Doesn't notice of the right to reinstate also require
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that it be an accurate reflection of the right to reinstate?
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Which the notice was not.
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So to be clear, I'm very happy to live with the first...
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(exhales) You have a peer if you win
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on that ground as opposed to winning...
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Yeah, on that grounds.
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But with respect to your question, I dispute the premise
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in the following two ways: the first one is, Paragraph 22
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requires you to disclose the existence
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of the right to reinstate notwithstanding the existence
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of conditions on that right to reinstate in Paragraph 19 .
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I would contrast the detail in Paragraph 22
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on the notice of the right to cure.
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If you look at the first sentence of Paragraph 22,
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it lists certain things you need to include
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in the right to cure.
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The amount of the default,
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the existence of default, the date.
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Later in Paragraph 22, all it says is,
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"You need to disclose the right to reinstate."
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Notwithstanding that there are conditions on the right
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to reinstate that aren't subject to any notice requirement,
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they're just listed in Paragraph 19.
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What Pinti and what the strict compliance regime
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require you to do is to disclose the information
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that's required by Paragraph 22.
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Telling a customer that they have the right to reinstate,
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when a customer is obligated to read a contract
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and understand that there are conditions on it,
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obligates them to look elsewhere
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for the conditions on the right to reinstate.
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The state-mandated notice that Chase is obligated to provide
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doesn't undermine your right to reinstate in any way,
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it states a true condition that you can reinstate
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up until the date of the foreclosure.
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The problem I have with your argument is that okay,
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your notice says you have the right to reinstate
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and then it goes on to say, and you can reinstate it
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by say
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giving the
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lender
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a dollar
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on the morning
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of foreclosure and that will suffice when in fact,
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that's just plain wrong.
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So I think there are circumstances where notwithstanding
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having disclosed the right to reinstate under Paragraph 22,
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you could make a separate disclosure that vitiates
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your compliance with Paragraph 22.
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That's not what happened here.
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Isn't that effectively what the First Circuit
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effectively found, is that you basically,
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is that the notice, which again you're obliged to give
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by the Department of Banks,
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basically says you can on the morning of foreclosure say,
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"Here's the past amount due," and that is enough to avoid
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foreclosure, when in fact you could say, "Sorry, you should
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have done this five days ago, when in fact you have not."
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Doesn't that undercut the purpose behind giving
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of the notice if we allow the notice
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to be potentially deceptive?
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I don't think potentially deceptive
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is the standard and again, I'm not disputing
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the initial premise of your question.
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I don't think the standard is potentially deceptive.
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The Court has never held that
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in the context of a Section 21 case.
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Focusing on the strict compliance regime...
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Before you leave that point,
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you've read the Abstract Club's Brief, Amicus Brief right?
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Correct.
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And they say, "Okay, let's not
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let's not confuse things
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anymore than they already are.
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What's required by Pinti is Paragraph 22
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and that was done here, end of story."
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Should that, I mean this is a group that deals
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with this as a societal-wide problem, should we stick with,
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is that brief...
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Absolutely!
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And that's what I was about to say is,
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section 21 strict compliance regime,
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this Court and all of its decisions dealing
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with this strict compliance regime
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has been exquisitely attentive to the implications
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of these rules on bonafide third-party purchasers,
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the title industry and anyone
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who has an interest in real property.
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And part of the issue that this Court has focused on
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is the administrability of a rule
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that requires strict compliance.
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Requiring, and this was part of the discussion
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between the majority and the descedent Pinti,
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requiring that someone comply with the terms
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of Paragraph 22, a party could discern that
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from the face of records that are recorded
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if they look at the notice and the terms of Paragraph 22.
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It's easy enough to look at those two things side by side
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and say this was compliant, therefore the mortgage
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is not subject to a voidness challenge later on.
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Saying that there's a potentially deceptive standard
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that is broad-reaching and as the First Circuit
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articulated it, requires you to abstain from saying anything
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that could potentially be deceptive or inaccurate.
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Not tethered to any matter that's related to the exercise
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of the power of sale, but anything.
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There's no way for someone looking at records
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that are recorded with a County Assessor's office
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to figure out whether there's anything
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potentially deceptive.
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So the strict compliance regime makes sense
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in order to ensure that parties that are non-judicially
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going to foreclose are actually complying
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with their obligations, both statutory
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and contractual but it has limits.
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And I think the limits are attentive to the needs
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of third party, bonafide purchasers and the real risks
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that the regime imposes on them
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when they've taken a property in good faith.
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And also requires some attention
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to how administrable the rule is.
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Can you figure out by looking at the face of documents
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whether this has been complied with or not?
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And I think again, to go back to the Pinti rule
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the issue in Pinti is that what Emigrant told the borrower
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was the exact opposite of what Paragraph 22 required.
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Paragraph 22 required the lender to tell you
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that you have the right to bring an action
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to challenge your default.
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And what the disclosure at issue in Pinti
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said was, you have the right not to do that.
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You can lay in wait and you could assert this as a defense.
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There's never going to be an opportunity to do that
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because this is a non-judicial foreclosure.
261
00:12:02.600 --> 00:12:06.000
And so the right that was required to be disclosed
262
00:12:06.000 --> 00:12:09.230
in Paragraph 22 was never disclosed in Pinti.
263
00:12:09.230 --> 00:12:11.320
And to give another example in Merrigan,
264
00:12:11.320 --> 00:12:13.940
the right that was required to be disclosed in Merrigan
265
00:12:13.940 --> 00:12:17.190
was the right that's at issue here, the right to reinstate.
266
00:12:17.190 --> 00:12:18.691
And this Court held that telling someone
267
00:12:18.691 --> 00:12:21.540
contrary to Paragraph 22, which says you do have the right
268
00:12:21.540 --> 00:12:24.160
to reinstate that you may have the right to reinstate
269
00:12:24.160 --> 00:12:26.600
simply misstates that right, and that's why the Court
270
00:12:26.600 --> 00:12:28.280
in Merrigan agreed that that was a violation
271
00:12:28.280 --> 00:12:30.247
of Paragraph 22; that's not what happened here.
272
00:12:30.247 --> 00:12:32.210
But it's not, I'm mean from the point of view
273
00:12:32.210 --> 00:12:35.680
of the Abstract Club, all that the First Circuit
274
00:12:35.680 --> 00:12:40.330
effectively said was that Paragraph 22 says you have a right
275
00:12:40.330 --> 00:12:44.350
to reinstate, Paragraph 19 says, here's how you reinstate.
276
00:12:44.350 --> 00:12:46.530
And if you were to going to mischaracterize
277
00:12:46.530 --> 00:12:51.530
how you can reinstate that could be a violation of Pinti.
278
00:12:51.950 --> 00:12:55.307
But the people reviewing it would have Paragraph 22
279
00:12:55.307 --> 00:12:59.810
and Paragraph 19 and the notice, so all that would be
280
00:12:59.810 --> 00:13:03.370
required is they would need to look, not only at the fact
281
00:13:03.370 --> 00:13:04.920
that you have a right to reinstate
282
00:13:04.920 --> 00:13:08.070
but also to make sure that the manner
283
00:13:08.070 --> 00:13:10.673
in which you reinstate is also accurately reflected.
284
00:13:12.632 --> 00:13:16.960
I think that's correct but number one, Paragraph 19
285
00:13:16.960 --> 00:13:20.560
as even the First Circuit agreed, doesn't require notice.
286
00:13:20.560 --> 00:13:23.230
I mean Paragraph 19 is a substantive enumeration
287
00:13:23.230 --> 00:13:25.920
of the conditions for exercise of the right to reinstate.
288
00:13:25.920 --> 00:13:28.205
And again I just remind the Court, that Paragraph 22
289
00:13:28.205 --> 00:13:31.720
doesn't require any enumeration of those conditions.
290
00:13:31.720 --> 00:13:33.440
It says you have the right to reinstate.
291
00:13:33.440 --> 00:13:36.810
Paragraph 22 does require the enumeration of conditions
292
00:13:36.810 --> 00:13:39.850
to cure the default and that is a meaningful distinction
293
00:13:39.850 --> 00:13:42.530
particularly in a strict compliance regime.
294
00:13:42.530 --> 00:13:44.854
Again, I do think, to go to Justice Kafker's point,
295
00:13:44.854 --> 00:13:49.190
you want to be able to have a regime in which bonafide,
296
00:13:49.190 --> 00:13:51.440
third party purchasers all the way down the line
297
00:13:51.440 --> 00:13:54.240
are able to figure out, looking at recorded documents
298
00:13:54.240 --> 00:13:56.340
whether there's been compliance here.
299
00:13:56.340 --> 00:13:58.635
And their focus is going to be on Paragraph,
300
00:13:58.635 --> 00:14:00.900
in light of Pinti, their focus is going to be on Paragraph
301
00:14:00.900 --> 00:14:04.380
22, what Paragraph 22 and the given mortgage says
302
00:14:04.380 --> 00:14:06.950
and again the G-S-E mortgages used in something
303
00:14:06.950 --> 00:14:10.310
upwards of 70% or 90% of those mortgages
304
00:14:10.310 --> 00:14:13.680
and you want to be able to compare the notice
305
00:14:13.680 --> 00:14:14.960
to Paragraph 22.
306
00:14:14.960 --> 00:14:16.430
With respect to the G-S-E mortgage
307
00:14:16.430 --> 00:14:17.740
and their proliferate use in this state,
308
00:14:17.740 --> 00:14:19.890
I would just go back to Chief Justice Gants' first point.
309
00:14:19.890 --> 00:14:22.630
This is a D-O-B promulgated notice and certainly D-O-B
310
00:14:22.630 --> 00:14:26.988
didn't view there to be any inconsistency
311
00:14:26.988 --> 00:14:29.772
or anything potentially deceptive about requiring lenders
312
00:14:29.772 --> 00:14:34.230
to make this disclosure in view of the G-S-E mortgage,
313
00:14:34.230 --> 00:14:37.240
which as a form matter, includes this provision
314
00:14:37.240 --> 00:14:39.260
saying that you have up until five days
315
00:14:39.260 --> 00:14:41.610
or the earliest of applicable law.
316
00:14:41.610 --> 00:14:45.049
And so I think the two notices, there's no inconsistency
317
00:14:45.049 --> 00:14:49.580
that a reasonable borrower would perceive between them,
318
00:14:49.580 --> 00:14:51.730
looking at the mortgage and looking at all of the terms
319
00:14:51.730 --> 00:14:54.350
of the mortgage, or looking at the notice
320
00:14:54.350 --> 00:14:56.700
and then looking at all of the terms of the mortgage.
321
00:14:56.700 --> 00:14:58.720
Well there is a difference unless you accept the view
322
00:14:58.720 --> 00:15:02.903
that applicable law requires you to accept it upon payment.
323
00:15:03.970 --> 00:15:07.100
Certainly or as a matter of practice.
324
00:15:07.100 --> 00:15:07.933
The fact of the matter is that no one
325
00:15:07.933 --> 00:15:10.442
is no one's ever going to be potentially deceived
326
00:15:10.442 --> 00:15:14.050
in a way that harms them because they are always going to
327
00:15:14.050 --> 00:15:16.310
have the ability to reinstate the mortgage
328
00:15:16.310 --> 00:15:17.310
up until the date of sale.
329
00:15:17.310 --> 00:15:19.990
And whether that's as a function of the applicable law
330
00:15:19.990 --> 00:15:21.470
provision or as a matter of practice,
331
00:15:21.470 --> 00:15:23.070
I don't think makes a difference here.
332
00:15:23.070 --> 00:15:26.300
Because again, in order for someone to be deceived
333
00:15:26.300 --> 00:15:29.440
or even potentially be deceived there needs to be something
334
00:15:29.440 --> 00:15:31.100
that redoubts to their detriment
335
00:15:31.100 --> 00:15:34.690
and there's nothing in the record to suggest that that's so.
336
00:15:34.690 --> 00:15:35.650
Okay, thank you.
337
00:15:35.650 --> 00:15:36.723
Thank you, Your Honor.
338
00:15:38.051 --> 00:15:38.890
(papers rustling)
339
00:15:38.890 --> 00:15:41.270
Mr., is it Dion or Dion?
340
00:15:41.270 --> 00:15:42.620
Dion, Your Honor, thank you.
341
00:15:42.620 --> 00:15:43.453
Dion, good morning.
342
00:15:43.453 --> 00:15:45.660
May is please the Court, attorney Todd Dion
343
00:15:45.660 --> 00:15:47.960
on behalf of the appellee.
344
00:15:47.960 --> 00:15:50.910
The Honorable Chief Justice and Honorable Associate Justices
345
00:15:50.910 --> 00:15:52.940
of the Supreme Judicial Court of Commonwealth of
346
00:15:52.940 --> 00:15:54.940
Massachusetts, good morning.
347
00:15:54.940 --> 00:15:57.800
It is an honor to present this case before this honorable
348
00:15:57.800 --> 00:16:00.540
court today, as not only have I been reading the same
349
00:16:00.540 --> 00:16:03.684
Paragraph within the same mortgage for the last five years,
350
00:16:03.684 --> 00:16:04.546
(Judge chuckling)
351
00:16:04.546 --> 00:16:05.519
but I've also been reading...
352
00:16:05.519 --> 00:16:06.522
Groundhog Day
353
00:16:06.522 --> 00:16:08.090
and closely following the words and interpretations
354
00:16:08.090 --> 00:16:10.407
of this honorable court regarding that one Paragraph
355
00:16:10.407 --> 00:16:12.303
for the last five years as well.
356
00:16:13.150 --> 00:16:15.870
While there are many jurisdictions in the United States
357
00:16:15.870 --> 00:16:18.112
that have followed the tenet that a mortgagee
358
00:16:18.112 --> 00:16:22.040
must strictly comply with the terms of this mortgage
359
00:16:22.040 --> 00:16:24.810
from the Supreme Court of Alabama, to the Supreme Court
360
00:16:24.810 --> 00:16:28.230
of Hawaii and many jurisdictions in between including
361
00:16:28.230 --> 00:16:30.890
Illinois, Minnesota and Rhode Island,
362
00:16:30.890 --> 00:16:34.088
it is this honorable court that has, I must say led the way
363
00:16:34.088 --> 00:16:36.620
and is ahead of these other jurisdictions
364
00:16:36.620 --> 00:16:39.060
regarding the application and the meaning
365
00:16:39.060 --> 00:16:41.690
of strict compliance as it specifically relates
366
00:16:41.690 --> 00:16:44.072
to Paragraph 22 of this mortgage.
367
00:16:44.072 --> 00:16:47.180
Therefore, I respectfully look to this honorable court's
368
00:16:47.180 --> 00:16:50.550
guidance regarding this unique and esoteric issue
369
00:16:50.550 --> 00:16:53.851
under Massachusetts law and perhaps further explain
370
00:16:53.851 --> 00:16:55.770
the meaning of strict compliance
371
00:16:55.770 --> 00:16:58.310
with the terms of this mortgage.
372
00:16:58.310 --> 00:17:01.520
The words of this Court in the landmark Pinti case
373
00:17:01.520 --> 00:17:04.270
indicated that the standard of strict compliance
374
00:17:04.270 --> 00:17:08.620
demands that a Paragraph 22 notice must not potentially
375
00:17:08.620 --> 00:17:11.610
mislead a homeowner into sitting on his or her
376
00:17:11.610 --> 00:17:14.924
unequivocal rights under the terms of the mortgage,
377
00:17:14.924 --> 00:17:19.240
otherwise it's just a a mere irregularity, was the word
378
00:17:19.240 --> 00:17:22.930
of the Chase decision that was cited by the Pinti case.
379
00:17:22.930 --> 00:17:27.662
So the notice must not contain inaccurate statements
380
00:17:27.662 --> 00:17:30.020
and the inaccurate statements
381
00:17:30.020 --> 00:17:33.520
must not be just a mere irregularity.
382
00:17:33.520 --> 00:17:36.700
Now, while Chase argues that avoiding the potential
383
00:17:36.700 --> 00:17:39.990
to mislead is not a specific element of the Massachusetts
384
00:17:39.990 --> 00:17:43.840
statutory power of sale, it is certainly a requirement
385
00:17:43.840 --> 00:17:47.220
of the standard of strict compliance that any variation
386
00:17:47.220 --> 00:17:50.694
from or additional language in the Paragraph 22 notice
387
00:17:50.694 --> 00:17:53.470
not conflict with an unequivocal right
388
00:17:53.470 --> 00:17:56.940
outlined in Paragraph 22 that could lead
389
00:17:56.940 --> 00:18:00.171
to the disastrous consequence of foreclosure.
390
00:18:00.171 --> 00:18:03.340
Let me ask you the question, I asked your brother.
391
00:18:03.340 --> 00:18:06.190
If we were to say that the Department of Banks
392
00:18:06.190 --> 00:18:10.120
requires this notice to be sent and requires that it
393
00:18:10.120 --> 00:18:12.180
be sent in precisely the language
394
00:18:12.180 --> 00:18:17.180
established in the regulation, and that language declares
395
00:18:18.160 --> 00:18:20.350
that quote, "You could still avoid foreclosure
396
00:18:20.350 --> 00:18:22.170
by paying the total past due amount
397
00:18:22.170 --> 00:18:24.920
before foreclosure sale takes place."
398
00:18:24.920 --> 00:18:28.070
And if we say, well that is now the law of Massachusetts
399
00:18:28.070 --> 00:18:32.240
pursuant to this regulation, where is there any deception?
400
00:18:32.240 --> 00:18:36.081
Where is there any risk of a disaster because indeed
401
00:18:36.081 --> 00:18:39.800
they would be obligated to accept that money
402
00:18:39.800 --> 00:18:42.330
and you could avoid foreclosure if you were to do that,
403
00:18:42.330 --> 00:18:44.170
despite what the mortgage may say.
404
00:18:44.170 --> 00:18:46.050
Well your Honor, first of all, that language
405
00:18:46.050 --> 00:18:49.240
is not required to be in a Paragraph 22 notice,
406
00:18:49.240 --> 00:18:51.480
it's required to be in a 35A notice,
407
00:18:51.480 --> 00:18:54.940
which this Court has been clear, that these are two separate
408
00:18:54.940 --> 00:18:57.950
types of notices with different requirements
409
00:18:57.950 --> 00:19:02.380
and definitely different consequences for non-compliance.
410
00:19:02.380 --> 00:19:05.750
I don't think the language in the regulation
411
00:19:05.750 --> 00:19:10.430
is strong enough to extend an unequivocal right
412
00:19:10.430 --> 00:19:14.120
to reinstate the mortgage until the foreclosure sale.
413
00:19:14.120 --> 00:19:16.400
Which I would argue they can't do anyway.
414
00:19:16.400 --> 00:19:18.810
How were they going to provide a right...
415
00:19:18.810 --> 00:19:20.360
Who's the "you can't", who's the 'you'
416
00:19:20.360 --> 00:19:21.960
in "you can't do it" or "they can't do it?"
417
00:19:21.960 --> 00:19:26.200
Well, (chuckling) Chase can not extend a right
418
00:19:26.200 --> 00:19:29.340
to reinstate and pay less than the accelerated amount
419
00:19:29.340 --> 00:19:31.880
to any time before the foreclosure sale
420
00:19:31.880 --> 00:19:33.540
because the whole purpose of foreclosure
421
00:19:33.540 --> 00:19:37.730
to begin with is to collect the entire accelerated amount.
422
00:19:37.730 --> 00:19:40.440
If they were to say, "Well the homeowner has a right
423
00:19:40.440 --> 00:19:43.890
to pay less than the accelerated amount at any time
424
00:19:43.890 --> 00:19:46.290
before the foreclosure", I think that would defeat
425
00:19:46.290 --> 00:19:48.730
the purpose of accelerating the loan to begin with.
426
00:19:48.730 --> 00:19:49.903
Okay, so what do we do with the fact
427
00:19:49.903 --> 00:19:52.370
the Department of Banks requires them to send this letter
428
00:19:52.370 --> 00:19:54.200
and requires them to send this letter
429
00:19:54.200 --> 00:19:56.510
with the language that they use?
430
00:19:56.510 --> 00:19:58.630
Well, it doesn't require them to send it
431
00:19:58.630 --> 00:20:00.580
in a Paragraph 22 letter.
432
00:20:00.580 --> 00:20:03.430
Chase elected to draft this
433
00:20:03.430 --> 00:20:05.900
so called, hybrid 35A,
434
00:20:05.900 --> 00:20:08.600
Paragraph 22 letter and when they did that,
435
00:20:08.600 --> 00:20:11.367
they bore the risk of
436
00:20:11.367 --> 00:20:13.500
it being evaluated
437
00:20:13.500 --> 00:20:15.540
under a standard of strict compliance.
438
00:20:15.540 --> 00:20:17.670
And with that being said, they could have looked
439
00:20:17.670 --> 00:20:21.830
at the notice and say, "Well, this language conflicts
440
00:20:21.830 --> 00:20:25.290
with the unequivocal right or deadline
441
00:20:25.290 --> 00:20:29.090
to reinstate the mortgage pursuant to Paragraph 19
442
00:20:29.090 --> 00:20:31.620
and add a few sentences to fix the problem.
443
00:20:31.620 --> 00:20:33.230
In fact, especially in light of the fact
444
00:20:33.230 --> 00:20:36.230
that I believe there has to be a deadline
445
00:20:36.230 --> 00:20:38.150
on the right to reinstate otherwise the loan
446
00:20:38.150 --> 00:20:40.630
can not be fully accelerated and they can't foreclose
447
00:20:40.630 --> 00:20:42.470
on the entire accelerated amount
448
00:20:42.470 --> 00:20:45.693
rather than some partial reinstatement amount.
449
00:20:46.987 --> 00:20:49.280
But doesn't
450
00:20:49.280 --> 00:20:51.980
Section 5604
451
00:20:51.980 --> 00:20:53.380
require them to use,
452
00:20:53.380 --> 00:20:55.860
to give this precise notice?
453
00:20:55.860 --> 00:20:59.340
It does require them to give the notice in a 35A letter.
454
00:20:59.340 --> 00:21:00.800
Well that's not accurate.
455
00:21:00.800 --> 00:21:02.093
We don't plan to give it.
456
00:21:04.022 --> 00:21:07.150
Would the Department of Banks not be unhappy with them?
457
00:21:07.150 --> 00:21:09.388
Well, it's not their choice.
458
00:21:09.388 --> 00:21:10.221
I'm sorry Your Honor.
459
00:21:10.221 --> 00:21:11.890
It says, "A mortgagee must provide a 90-day right to cure
460
00:21:11.890 --> 00:21:14.990
a notice that borrower in accordance at least 90 days...
461
00:21:20.906 --> 00:21:24.180
And I think it says it has to use exactly what the language
462
00:21:24.180 --> 00:21:27.550
that has to give this notice, right?
463
00:21:27.550 --> 00:21:29.810
They don't have a choice to include that language
464
00:21:29.810 --> 00:21:32.210
in a 35A letter, correct.
465
00:21:32.210 --> 00:21:35.880
However, they did have a choice right below that sentence,
466
00:21:35.880 --> 00:21:37.940
there is a fill in the blank section,
467
00:21:37.940 --> 00:21:40.861
where they have to input the total amount due
468
00:21:40.861 --> 00:21:44.290
and a date by which that may be paid
469
00:21:44.290 --> 00:21:46.810
to avoid eviction and foreclosure.
470
00:21:46.810 --> 00:21:50.330
At that point, they chose rather than distinguish
471
00:21:50.330 --> 00:21:54.010
between the possibilities of what total past due amount
472
00:21:54.010 --> 00:21:58.090
could mean, they chose to input the pre-acceleration
473
00:21:58.090 --> 00:22:02.364
default amount and they chose to also the five-day
474
00:22:02.364 --> 00:22:05.570
limitation on the mortgage, they didn't comply
475
00:22:05.570 --> 00:22:07.920
with that when they filled in the date as well.
476
00:22:07.920 --> 00:22:11.260
So that was their choice to fill in those blanks
477
00:22:11.260 --> 00:22:13.560
and they inaccurately filled in those blanks
478
00:22:13.560 --> 00:22:17.660
in light of the language of Paragraph 19.
479
00:22:17.660 --> 00:22:19.820
And if your client had paid that amount,
480
00:22:19.820 --> 00:22:21.160
even though it might have been less
481
00:22:21.160 --> 00:22:23.900
than otherwise required by the mortgage,
482
00:22:23.900 --> 00:22:26.303
are you saying they could still have foreclosed?
483
00:22:27.750 --> 00:22:30.380
They no longer have a right to reinstate
484
00:22:30.380 --> 00:22:34.699
after acceleration, so Chase very well could have said,
485
00:22:34.699 --> 00:22:39.120
"Sorry, this is not the full accelerated amount
486
00:22:39.120 --> 00:22:41.350
pursuant to the terms of your mortgage."
487
00:22:41.350 --> 00:22:42.996
That language in the regulation,
488
00:22:42.996 --> 00:22:44.840
it doesn't even mention a right
489
00:22:44.840 --> 00:22:47.070
to reinstate after acceleration.
490
00:22:47.070 --> 00:22:49.250
It doesn't, furthermore it says
491
00:22:51.010 --> 00:22:53.420
the homeowner can avoid foreclosure
492
00:22:53.420 --> 00:22:55.880
by paying the total past due amount.
493
00:22:55.880 --> 00:22:58.000
That's not specific enough.
494
00:22:58.000 --> 00:23:01.930
I mean they can, I can proclaim that I can walk down
495
00:23:01.930 --> 00:23:03.240
Commonwealth Avenue today
496
00:23:03.240 --> 00:23:05.479
but that doesn't mean that I have to.
497
00:23:05.479 --> 00:23:07.640
Just like Chase can proclaim...
498
00:23:07.640 --> 00:23:09.677
It also says, on the first page of it,
499
00:23:09.677 --> 00:23:12.480
"You must pay the past due amount of,"
500
00:23:12.480 --> 00:23:14.800
and you fill in the payable amount.
501
00:23:14.800 --> 00:23:18.490
So the payable amount is included in this notice.
502
00:23:18.490 --> 00:23:22.020
Yes and it is the pre-acceleration, default amount
503
00:23:22.020 --> 00:23:24.840
that was filled in which I believe is also misleading
504
00:23:24.840 --> 00:23:27.540
because it's not acknowledging that that amount
505
00:23:27.540 --> 00:23:30.502
could change dramatically
506
00:23:30.502 --> 00:23:32.110
after
507
00:23:32.110 --> 00:23:34.430
the supposive acceleration
508
00:23:34.430 --> 00:23:36.650
and definitely within five days of the sale
509
00:23:36.650 --> 00:23:38.630
when the entire amount is due.
510
00:23:38.630 --> 00:23:41.830
I mean it's a difference of hundreds of thousands.
511
00:23:41.830 --> 00:23:45.200
So I do believe that they should have looked at this notice
512
00:23:45.200 --> 00:23:48.790
and figured out since this is being examined
513
00:23:48.790 --> 00:23:51.160
under a standard of strict compliance
514
00:23:51.160 --> 00:23:54.230
we should acknowledge the terms of the mortgage
515
00:23:54.230 --> 00:23:56.343
which dramatically change the balance.
516
00:23:56.343 --> 00:23:59.800
In your view, any of these kinds of mathematical errors
517
00:23:59.800 --> 00:24:01.893
would also be Pinti violations?
518
00:24:02.940 --> 00:24:04.703
I'm just trying to get a sense of what,
519
00:24:04.703 --> 00:24:08.700
again I'm concerned that Pinti is setting up,
520
00:24:08.700 --> 00:24:11.730
it's requiring strict compliance with something
521
00:24:11.730 --> 00:24:15.464
but it seems like you're trying to sweep in a lot more
522
00:24:15.464 --> 00:24:19.010
and that raises all kinds of concerns,
523
00:24:19.010 --> 00:24:21.820
given that this is standard verbiage
524
00:24:22.958 --> 00:24:26.070
in an industry which we've already unsettled
525
00:24:26.070 --> 00:24:27.723
a couple of times.
526
00:24:30.330 --> 00:24:33.350
If they were going to, if Chase...
527
00:24:33.350 --> 00:24:36.640
But to your question, any mathematical errors
528
00:24:36.640 --> 00:24:39.640
are now Pinti violations too, in your view?
529
00:24:39.640 --> 00:24:41.470
No, any false statements.
530
00:24:41.470 --> 00:24:45.230
This is a false statement to say that they can accept less
531
00:24:45.230 --> 00:24:47.990
than the accelerated amount any time before the foreclosure
532
00:24:47.990 --> 00:24:50.650
sale because they have to accelerate the whole amount.
533
00:24:50.650 --> 00:24:52.720
They're not gonna foreclose on half of a mortgage,
534
00:24:52.720 --> 00:24:53.646
they need to foreclose...
535
00:24:53.646 --> 00:24:55.046
So, if they get $10 wrong,
536
00:24:57.160 --> 00:24:59.480
that's also going to be a Pinti violation?
537
00:24:59.480 --> 00:25:02.110
If if puts the homeowner in a position...
538
00:25:02.110 --> 00:25:07.013
They say the homeowner owns $247,000.33
539
00:25:08.430 --> 00:25:10.810
and it's actually 68 cents.
540
00:25:10.810 --> 00:25:14.550
Are we gonna, is that also a Pinti violation now?
541
00:25:14.550 --> 00:25:18.070
Well, if it could lead them to the disastrous consequence
542
00:25:18.070 --> 00:25:21.851
of foreclosure because it's inaccurate, then, yes.
543
00:25:21.851 --> 00:25:24.270
Isn't that a problem?
544
00:25:24.270 --> 00:25:28.063
If that's what Pinti meant, we better fix Pinti.
545
00:25:29.020 --> 00:25:31.600
Well the homeowner has a right...
546
00:25:31.600 --> 00:25:36.370
Gotta be some substance to it as opposed to
547
00:25:36.370 --> 00:25:38.980
you know, technical
548
00:25:40.250 --> 00:25:43.200
compliance, it doesn't make any difference.
549
00:25:43.200 --> 00:25:47.853
Pinti's gotta have a meaningful parameter, doesn't it?
550
00:25:48.690 --> 00:25:49.523
Yes it does.
551
00:25:49.523 --> 00:25:50.437
And I believe in this case...
552
00:25:50.437 --> 00:25:54.340
But in your case, it's any, anything inaccurate
553
00:25:54.340 --> 00:25:56.260
is a Pinti violation.
554
00:25:56.260 --> 00:25:57.820
It's not just an inaccuracy.
555
00:25:57.820 --> 00:26:00.120
It also involves and unequivocal right
556
00:26:00.120 --> 00:26:01.980
that guarantees the homeowner
557
00:26:01.980 --> 00:26:04.200
a right to challenge the foreclosure.
558
00:26:04.200 --> 00:26:06.030
Before five days, before the sale
559
00:26:06.030 --> 00:26:08.830
they're guaranteed a right to reinstate the mortgage.
560
00:26:08.830 --> 00:26:12.190
So if Chase says, "No, we're not gonna reinstate
561
00:26:12.190 --> 00:26:15.530
the mortgage," they can void the foreclosure.
562
00:26:15.530 --> 00:26:18.060
After five days, they no longer have that right
563
00:26:18.060 --> 00:26:19.500
and I believe it's an important right
564
00:26:19.500 --> 00:26:21.430
that must be paid attention to.
565
00:26:21.430 --> 00:26:24.870
If after five days, if Chase refuses,
566
00:26:24.870 --> 00:26:26.740
they have no more recourse.
567
00:26:26.740 --> 00:26:31.640
They can't void the foreclosure if Chase refuses to accept
568
00:26:31.640 --> 00:26:33.390
less than the accelerated amount
569
00:26:33.390 --> 00:26:34.870
which the way I'm looking at the language
570
00:26:34.870 --> 00:26:37.410
of this mortgage, they very well can.
571
00:26:37.410 --> 00:26:40.583
So that puts the homeowner in a bad position.
572
00:26:45.020 --> 00:26:50.020
Also, I would argue, I mentioned the language below,
573
00:26:50.345 --> 00:26:54.100
the language in question where they were input the total
574
00:26:54.100 --> 00:26:56.420
past due amount and the date,
575
00:26:56.420 --> 00:26:58.370
35A itself
576
00:26:58.370 --> 00:26:59.500
requires
577
00:27:01.449 --> 00:27:02.335
a statement
578
00:27:02.335 --> 00:27:03.168
in the notice
579
00:27:03.168 --> 00:27:05.019
that they have a right
580
00:27:05.019 --> 00:27:07.920
to redeem the mortgage and a date
581
00:27:07.920 --> 00:27:11.470
by which the past due amount should be paid.
582
00:27:11.470 --> 00:27:13.260
I think that's inaccurate as well
583
00:27:13.260 --> 00:27:16.610
because they're not acknowledging the Paragraph 19
584
00:27:16.610 --> 00:27:19.310
conditions of the mortgage, the five days
585
00:27:19.310 --> 00:27:23.040
and that they have a right to reinstate
586
00:27:23.040 --> 00:27:24.853
the mortgage prior to five days.
587
00:27:27.514 --> 00:27:30.460
A problem I have with your theory
588
00:27:30.460 --> 00:27:35.460
is that if the mortgage says they don't need to collect,
589
00:27:37.907 --> 00:27:41.490
you gotta pay the amount due five days
590
00:27:41.490 --> 00:27:43.210
before the foreclosure.
591
00:27:43.210 --> 00:27:46.698
And the bank sends a notice that says you can pay it
592
00:27:46.698 --> 00:27:49.900
anytime before foreclosure
593
00:27:51.060 --> 00:27:52.870
and the bank indeed will accept
594
00:27:52.870 --> 00:27:57.870
that at any time before foreclosure, why is that deceptive?
595
00:27:58.110 --> 00:28:00.592
It's a departure from the mortgage but it's a departure
596
00:28:00.592 --> 00:28:04.720
to the disadvantage of the lender and
597
00:28:05.920 --> 00:28:06.800
under your theory,
598
00:28:06.800 --> 00:28:09.210
anytime the lender would could a break in the notice
599
00:28:09.210 --> 00:28:11.053
and give more time to the borrower,
600
00:28:11.053 --> 00:28:13.890
that would be a Pinti violation.
601
00:28:13.890 --> 00:28:17.600
Well there has to be a deadline on the right to reinstate
602
00:28:17.600 --> 00:28:20.430
otherwise there is not a true acceleration.
603
00:28:20.430 --> 00:28:24.060
So, I don't care if it's five days or five seconds
604
00:28:24.060 --> 00:28:26.397
before the foreclosure, at some point they have to say,
605
00:28:26.397 --> 00:28:29.680
"Okay, we are demanding the full accelerated amount,"
606
00:28:29.680 --> 00:28:32.620
without allowing the homeowner a right
607
00:28:32.620 --> 00:28:35.820
to pay less than the accelerated amount.
608
00:28:35.820 --> 00:28:40.820
So I believe at any point, if the hypothetical homeowner
609
00:28:41.760 --> 00:28:46.620
could five seconds before the foreclosure tender the amount
610
00:28:46.620 --> 00:28:49.370
Chase could refuse and they would be misled
611
00:28:49.370 --> 00:28:51.393
by this notice into doing that.
612
00:28:53.030 --> 00:28:54.733
That assumes they could refuse.
613
00:28:55.690 --> 00:28:56.523
I'm sorry, Your Honor.
614
00:28:56.523 --> 00:28:59.840
Your argument is premised on the view that Chase
615
00:28:59.840 --> 00:29:02.910
could refuse do what the notice says
616
00:29:04.303 --> 00:29:05.136
can be done.
617
00:29:05.136 --> 00:29:05.969
Yes.
618
00:29:05.969 --> 00:29:08.250
I would argue that they in fact have to at some point
619
00:29:08.250 --> 00:29:13.130
before the foreclosure, they have to demand the full
620
00:29:13.130 --> 00:29:16.590
accelerated amount and not say that the homeowner
621
00:29:16.590 --> 00:29:20.250
has a right to pay less than the accelerated amount.
622
00:29:20.250 --> 00:29:21.940
At some point before the foreclosure
623
00:29:21.940 --> 00:29:24.823
if they're gonna accurately foreclose on the full amount.
624
00:29:27.890 --> 00:29:28.827
Okay, thank you.
625
00:29:28.827 --> 00:29:29.763
Thank you, Your Honor.
626
00:29:30.600 --> 00:29:33.433
(papers rustling)
627
00:29:35.380 --> 00:29:36.920
Mr. Chief Justice, may I request leave
628
00:29:36.920 --> 00:29:39.023
to file a post-argument letter?
629
00:29:40.000 --> 00:29:40.840
Sure.
630
00:29:40.840 --> 00:29:41.673
Thank you.
631
00:29:41.673 --> 00:29:43.620
Long as you give notice to the other side.
632
00:29:43.620 --> 00:29:44.750
Absolutely.
633
00:29:44.750 --> 00:29:45.889
Does that mean I would have...
634
00:29:45.889 --> 00:29:48.073
You would have an equal right to respond.
635
00:29:48.073 --> 00:29:48.906
Okay.
636
00:29:48.906 --> 00:29:51.690
But I would encourage brevity
637
00:29:51.690 --> 00:29:54.438
which is the soul of wit in these matters.
638
00:29:54.438 --> 00:29:56.447
[Lawyers Together] Thanks Your Honor.
639
00:29:56.447 --> 00:29:59.280
(papers rustling)