Thursday, June 28, 2012

'This Is Crazy': Company Snatches Condos From Owners

By Teke Wiggin

Teresa Fusco thought she had done everything that she needed to do to sail comfortably into her golden years. She owned a condominium unit in Reading, Pa., with an appraised valued of $101,000, and she had a rainy-day fund in case her health failed.

So she was shocked when earlier this year she suddenly found herself with no home and a wrecked credit score after a company that bought most of the condo complex sold her unit for less than half of what she thought it was worth. To make matters worse, Fusco (pictured left) is still on the hook for the $71,000 mortgage on the property that she no longer owns.

"As a single woman, 56 years old, who works hard and was looking to retire in that place, I had everything set up," Fusco said.

Her plans -- and those of 10 other homeowners who say they've had their properties stolen from them -- started to unravel when Deer Path Woods, the condo complex where they lived, went into foreclosure last fall. Fusco's unit was one of 11 that were individually owned; another 97 were rental units. When the owner of the rental units failed to pay his mortgage, a company under the control of local developer Kevin Timochenko snapped all of them up for $7,200 at a foreclosure auction.

The purchase gave Timochenko's company, Water Polo I, LP, control of nearly 90 percent of the units of the complex, arming it with enough votes to dictate condominium association policy. Soon after the purchase, Fusco and her fellow homeowners received a letter informing them that, come January, condo association fees would more than double, to $450 a month. The increase, according to a representative of Water Polo I, was to pay for upgrades to the complex that the tenants had demanded.

"We were all freaking out because we couldn't afford that in addition to the mortgages that we were paying," said former unit owner Adrienne Dawkins (pictured with her children below), who took out a $102,500 mortgage to buy her unit at Deer Path in 2007, and has since been forced to leave her home along with her three children. "We agreed to pay $200 when we bought our homes."

Anxiety over raised assessment fees paled in comparison to what happened next: The new condo owner called a vote to terminate the condo association altogether.

From Condos to Rentals

Dissolving a condominium organization isn't unusual. Termination reduces management costs, and in a depressed market makes it easier for homeowners to sell their units. It's often easier to find a buyer for an entire condominium, and a bank doesn't have to approve the sale. After termination, units of the dissolved condominium sell in bulk and are then typically converted into an apartment complex owned by a single developer.

"By buying the 89 percent of the units at the foreclosure sale last year, [Timochenko] acquired all of the units and all of the votes he needed to approve a termination," explains Tom Beaver, an attorney whom some of the unit owners turned to for help.

Here's the rub: Under Section 3220 of the Pennsylvania Uniform Condominium Act, when a condominium is dissolved, the condo association can put the entire condominium up for sale, regardless of who owns the individual units. So in acquiring control of the condo association, Water Polo I also gained the right to sell Fusco's home.

In April 2012, Deer Path Woods was put up for auction. Beaver, who attended the auction, said it sold for $3.425 million.

The buyer? Another company controlled by Kevin Timochenko. Along with the 97 rental units, the sale included the 11 owner-occupied apartments. The new buyer, Hoya I, LP, then converted the condominium into an all-rental apartment complex, now known as Spring Valley.

"The effect of terminating the condominium was to divest all of the unit owners of their real estate interest," Beaver said, adding that rentals are especially profitable for developers in today's market of high rental rates and diminished home values.

A Tale of Two Appraisals

It might not have been so bad if Fusco and the other owners got paid what they believed their homes were worth. Pennsylvania law states that in the event of a condominium sale, unit owners have the right to the fair market value of their homes as determined by an appraiser selected by the condominium association. That means that even though Fusco's unit had been valued at $101,000 by an independent appraiser earlier this year, she would get only the amount determined by the appraiser hired by the condominium association -- in this case, Water Polo I.

And the difference was shocking. After the sale, the 11 unit owners received letters saying that they or their lenders would each receive between $31,000 and $34,219 for the sale of their units. The owners were still responsible for the remaining balances on their mortgages, though. For Fusco, who took out a $94,025 loan in 2008 to buy her apartment, that means she's on the hook for about $40,000 even after her lender receives money from the sale.

Dawkins is in even more trouble: She owes $98,000 on her mortgage, making her liable for $60,000 even if her lender gets the maximum for the sale of her unit.

"[Water Polo I] really screwed her on this by not offering full market value with a legal industry appraisal and credible comparable condos," said Fusco's appraiser, Michael Robinson. "It was sad because she has a liability for the balance of her mortgage now."

So how is it that two appraisals on the same unit at around the same time could differ so dramatically?

A representative for Water Polo I suggests that the higher appraisals came when the units were treated as part of the now-dissolved condominium association, rather than simply as units of an apartment complex.

That doesn't hold water with George Schwambach, a roofer who owned his unit outright. Schwambach said that an independent appraiser valued his unit at $90,000 earlier this year.

"I'm losing sleep over this. This is crazy," Schwambach (pictured at left) said of the figure determined by the condominium association's appraiser. "My attorney is telling me we can't do nothing. It raises my blood pressure every time I think about it." Schwambach added that he had been renting his unit to a tenant, but the tenant, who was familiar with Timochenko, promptly vacated when he learned of the developer's connection to management.

That may not be surprising, considering a run-in that Timochenko's had with the law. As president of Metropolitan Management Group, which manages more than 10 apartment complexes in Berks County, Pa. including Deer Path's successor, Spring Valley, Timochenko was sentenced to 15 months in prison and fined $75,000 in 2006 for stealing gas from a utility company that served his apartments. The landlord's crime at one point put several tenants at risk of eviction by the Department of Housing and Urban Development, even though they hadn't participated in the scheme.

Continued here...

Wednesday, June 27, 2012

NJ Appellate Opinion on Mod-Related Claims

BAC HOME LOAN SERVICING, L.P., Plaintiff-Appellant, v. SYLVIA T. FICCO, Defendant-Respondent.

DOCKET NO. A-4756-10T4


2012 N.J. Super. Unpub. LEXIS 1458

January 31, 2012, Argued
June 21, 2012, Decided




In this residential foreclosure case, plaintiff BAC Home Loan Servicing, L.P. (formerlyCountrywide Home Loans, Inc. ) appeals from a February 25, 2011 order, granting a motion by defendant Sylvia T. Ficco to enforce a loan modification, and a May 9, 2011 order denying plaintiff's motion for reconsideration.

We agree with Judge Stephan C. Hansbury that defendant mortgagor presented legally competent evidence that by letter dated March 30, 2010, plaintiff mortgagee approved her application for a loan modification, and that she accepted plaintiff's offer by continuing to make payments under the loan modification offered to her. We also agree with the trial judge that plaintiff failed to present legally competent evidence to support its claim that the March 30, 2010 letter granting the loan modification was sent in error. We therefore affirm the orders on appeal, substantially  [*2] for the reasons stated by Judge Hansbury in the written statements he issued with those orders.


The relevant events can be summarized briefly as follows. In April 2007, defendant took out a home loan of nearly $600,000 secured by a thirty-year mortgage on her home. She defaulted and plaintiff filed aforeclosure complaint in June 2008. In October 2009, plaintiff accepted defendant's application for a loan modification. As part of that process, the parties entered into a Home Affordable Modification Trial Period Plan, and plaintiff sent defendant an October 12, 2009 letter encouraging her to "start your three-month trial period for your mortgage loan modification." The documents in the record show that as part of that Plan, plaintiff represented to defendant that if she provided a list of requested financial information, and if that information was found acceptable, and she made her payments, she would be approved for a permanent loan modification. By letter dated March 30, 2010, plaintiff advised defendant that she had qualified for a permanent loan modification, and that she would shortly receive the Modification Agreement to sign. The letter "strongly encourage[d]" her to keep making  [*3] her payments under the plan, which she faithfully did. Plaintiff cashed her payment checks.

Although defendant continued to make her payments, seven months later, on November 22, 2010, plaintiff changed its position and sent defendant a letter advising that she was not eligible for a loan modification after all. The letter did not mention any failure by defendant to submit information, sign documents, or otherwise cooperate in the modification process. Instead, the letter asserted that plaintiff's calculation of the "net present value of a modification" revealed that modifying the loan would not be "in the financial interest of the investor that owns your loan."

On November 23, 2010, defendant filed a motion to enforce the loan modification. Defendant's motion was supported by her November 22, 2010 certification, attesting to plaintiff's offer of the loan modification and the March 30 letter, attesting that she had made "all of the required mortgage payments from November, 2009, to the present," and properly authenticating copies of all of her canceled checks for those payments. Plaintiff filed a two-page letter brief in opposition. The judge found that plaintiff failed to submit any  [*4] legally competent evidence to support its opposition to defendant's motion, and that the letter from plaintiff's counsel was "uncertified hearsay." Noting that defendant had made all of her payments, pursuant to the March 30, 2010 letter telling her that she qualified for the loan modification, the judge held that plaintiff was bound by its March 30 offer and defendant's acceptance of that offer.

Plaintiff filed a motion for reconsideration, consisting of a brief with some unauthenticated documents attached. The trial judge denied the motion, noting once again the lack of competent evidence to support plaintiff's original motion opposition or its reconsideration motion. This appeal followed.


In its appeal, plaintiff contends that there was no enforceable loan modification because "there was never a meeting of the minds," primarily because the March 30 letter was sent "in error." Alternatively, plaintiff argues that the trial period offer was conditional and not an enforceable offer until further documents were presented and signed; and plaintiff never offered defendant a "permanent loan modification." At oral argument of this appeal, plaintiff's counsel candidly admitted the obvious  [*5] — the record contains no legally competent evidence to support plaintiff's central claim that the March 30 letter was sent in error. Celino v. Gen. Accident Ins., 211 N.J. Super. 538, 544, 512 A.2d 496 (App. Div. 1986) ("Facts intended to be relied on which do not already appear of record and which are not judicially noticeable are required to be submitted to the court by way of affidavit or testimony" rather than by merely attaching them to a brief.) In fact, plaintiff did not properly authenticate any of the documents it submitted to the trial court. Ibid. Plaintiff also improperly submitted a reply brief to this court attaching documents it did not submit to the trial court and asserting arguments it did not make before the trial court. See R. 2:5-4(a); Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234-35, 300 A.2d 142 (1973).

On this record, we find plaintiff's appellate arguments are without sufficient merit to warrant further discussion, beyond the following comments. R. 2:11-3(e)(1)(E). The March 30 letter constituted an offer, which defendant accepted. Whether we consider this interchange as the modification of a contract or as the binding settlement of litigation, the result is the same. Plaintiff was  [*6] bound to fulfill the offer that defendant accepted. Further, even if the March 30 letter were sent in error, we would be inclined to find that plaintiff was equitably estopped from denying defendant the benefit of the bargain, because she reasonably relied to her detriment on that letter in making continued payments. Knorr v. Smeal, 178 N.J. 169, 178, 836 A.2d 794 (2003).

Unlike the unpublished federal court decision plaintiff has cited to us, defendant's claim is not based merely on her having made payments under a trial period plan, but on plaintiff having unequivocally notified her that she qualified for the loan modification, and having induced her to make continued payments based on that promise. We emphasize that the obligation we find here, to provide defendant with a loan modification, lies with plaintiff. If plaintiff wishes to avoid alleged problems with the federal loan modification program, as represented to us at oral argument (albeit with no supporting legally competent evidence), our decision does not preclude plaintiff from offering to directly refinance defendant's mortgage through an "in house" loan.

Finally, we observe that inducing debtors to continue making mortgage payments over  [*7] an extended period of time, on the promise of a loan modification, only to eventually pull the rug out from under them when they are unable to satisfy criteria beyond prompt continuing payment of the mortgage, borders on unconscionability.1


1 We confess some puzzlement at why a mortgage company would continue foreclosure proceedings against a debtor who, unlike many, is actually paying her mortgage. The "net present value" investment formula seems divorced from the current reality, which is that foreclosure is unlikely to yield a higher investment return than keeping in place a "paying" mortgage. We emphasize, however, that our decision of this appeal does not turn on any of those observations, but on the application of legal and equitable principles to the evidentiary record before us.


Monday, June 25, 2012

AP: Court Blasts BofA for Reneging on Homeowner's Mortgage Makeover

By Samantha Henry

A New Jersey appeals court blasted Bank of America this week, chastising the company for the way it handled the case of a woman the court found to be making a good faith effort to hang on to her foreclosed home.

In upholding a lower court decision, the New Jersey Superior Court's appellate division questioned why the lender had approached Sylvia Ficco in October 2009 with a written offer to modify the mortgage payments on her Morris County home. The lender accepted her checks, and then tried to foreclose on the property, sending her a warning that the mortgage modification offer had been sent in error.

"We confess some puzzlement at why a mortgage company would continue foreclosure proceedings against a debtor who, unlike many, is actually paying her mortgage," the appellate judges wrote in a copy of the decision issued Thursday.

A message left Friday for the plaintiff's attorney, Jeanette J. O'Donnell, was not returned.

Court papers show that Bank of America division BAC Home Loan Servicing L.P., formerly Countrywide Home Loans Inc., had sent Ficco a letter in October 2009, offering her a three- month "loan modification" trial after she defaulted on a nearly $600,000 home loan. The letter said she would be able to join the modification program permanently if she met the requirements and paid on time, according to court papers. She was qualified for the program in March 2010, according to court papers, and started making payments on her $591,913 mortgage.

Continued here...

Saturday, June 23, 2012

Eaton v Fannie Mae (MA): only the holder of both note and mortgage can exercise the power of sale

Notable quotes:

"for a foreclosure sale pursuant to the power to be valid, the mortgagee must first comply with the terms of the mortgage and with the statutes relating to the foreclosure of mortgages by the exercise of a power of sale."




2012 Mass. LEXIS 488

June 22, 2012, Decided


Decision text below is the first available text from the court; it has not been editorially reviewed by LexisNexis. Publisher's editorial review, including Headnotes, Case Summary, Shepard's analysis or any amendments will be added in accordance with LexisNexis editorial guidelines.

Present: Ireland, C.J., Spina, Cordy, Botsford, Gants, Duffly, & Lenk, JJ.

Mortgage, Foreclosure, Assignment, Real estate. Real Property, Mortgage, Record title, Sale. Negotiable Instruments, Assignment, Note. Notice, Foreclosure of mortgage. Practice, Civil, Preliminary injunction, Summary process. Summary Process. Statute, Retroactive application. Words, "Mortgagee."

Civil action commenced in the Superior Court Department on April 8, 2011.

A motion for a preliminary injunction was heard by Frances A. McIntyre, J.

A petition for interlocutory review pursuant to G. L. c. 231, § 118, first par., was considered in the Appeals Court by Judd J. Carhart, J., and a decision denying the petition was reported by him to a panel of that court.

The Supreme Judicial Court on its own initiative transferred the case from the Appeals Court.

Richard E. Briansky (Joseph P. Calandrelli with him) for the defendants.

Samuel Levine (David A. Grossman & H. Esme Caramello with him) for the plaintiff.

The following submitted briefs for amici curiae:

Adam J. Levitin, pro se.

Max Weinstein, Stuart Rossman, & Paul Collier for WilmerHale Legal Services Center & others.

Marie McDonnell, pro se.

Diane C. Tillotson,  [*2] Robert J. Moriarty, Jr., & Thomas O. Moriarty for Real Estate Bar Association & another.

John L. O'Brien, Jr., pro se.

Steven A. Ablitt & James L. Rogal for Ablitt Scofield, P.C.

Mark B. Johnson & Michael A. Klass for American Land Title Association.

Richard A. Oetheimer for Mortgage Bankers Association.

Suchand Reddy Pingli, pro se.

Katherine McDonough, pro se.

Robert P. Marley, pro se.

Howard N. Cayne & David D. Fauvre, of the District of Columbia, & Asim Varma & Douglas M. Humphrey for Federal Housing Finance Agency.

Robert Napolitano, pro se.

BOTSFORD, J. In this case, we address the propriety of a foreclosure by power of sale undertaken by a mortgage holder that did not hold the underlying mortgage note. A judge in the Superior Court preliminarily enjoined the defendant Federal National Mortgage Association (Fannie Mae) from proceeding with a summary process action to evict the plaintiff, Henrietta Eaton, from her home, following a foreclosure sale of the property by the defendant Green Tree Servicing, LLC (Green Tree), as mortgagee. The judge ruled that Eaton likely would succeed on the merits of her claim that for a valid foreclosure sale to occur, both the mortgage and the  [*3] underlying note must be held by the foreclosing party; and that because Green Tree stipulated that it held only Eaton's mortgage, the foreclosure sale was void, and the defendants therefore were not entitled to evictEaton. Pursuant to G. L. c. 231, § 118, first par., the defendants petitioned a single justice of the Appeals Court for relief from the preliminary injunction. The single justice denied the petition and reported his decision to a panel of that court. We transferred the case to this court on our own motion.

For the reasons we discuss herein, we conclude as follows. A foreclosure sale conducted pursuant to a power of sale in a mortgage must comply with all applicable statutory provisions, including in particular G. L. c. 183, § 21, and G. L. c. 244, § 14. These statutes authorize a "mortgagee" to foreclose by sale pursuant to a power of sale in the mortgage, and require the "mortgagee" to provide notice and take other steps in connection with the sale. The meaning of the term "mortgagee" as used in the statutes is not free from ambiguity, but we now construe the term to refer to the person or entity then holding the mortgage and also either holding the mortgage note or acting  [*4] on behalf of the note holder. Further, we exercise our discretion to treat the construction announced in this decision as a new interpretation of the relevant statute, only to apply to foreclosures under the power of sale where statutory notice is provided after the date of this decision. We vacate the preliminary injunction and remand the case to the Superior Court for further proceedings consistent with this opinion. 

1. Background. On September 12, 2007, Eaton refinanced the mortgage on her home in the Roslindale section of Boston (Roslindale property) by executing a promissory note payable to BankUnited, FSB (BankUnited, or lender) for $145,000. That same day, she also executed a mortgage, referred to in the mortgage itself as a "[s]ecurity [i]nstrument." The mortgage is separate from, but by its terms clearly connected to, the promissory note. The parties to the mortgage are Eaton as the "[b]orrower," BankUnited as the "[l]ender," and Mortgage Electronic Registration Systems, Inc. (MERS) as the "mortgagee." 

Under the mortgage executed by Eaton, MERS as mortgagee (or its assignee) holds legal title to the Roslindale property with power of sale "solely as nominee" of the lender  [*5] BankUnited (or its assignee). However, "if necessary to comply with law or custom, MERS (as nominee for Lender and Lender's successors and assigns) has the right: to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property; and to take any action required of Lender . . . ." 

The mortgage also contains a series of covenants that run exclusively between BankUnited as lender and Eaton.The final covenant, entitled "Acceleration; Remedies," empowers the lender, on default by Eaton, to "invoke the STATUTORY POWER OF SALE and any other remedies permitted by applicable law." In this regard, the covenant obligates the lender, in invoking the statutory power of sale, to mail a copy of a notice of sale to Eaton.

On April 22, 2009, MERS assigned its interest as mortgagee to Green Tree and recorded the assignment in the Suffolk County registry of deeds. The record contains no evidence of a corresponding transfer of the note. The note was indorsed in blank by BankUnited on an undetermined date. 

Later in 2009, after Eaton failed to make payments on the note, Green Tree, as assignee of MERS, moved to foreclose on her home through exercise  [*6] of a power of sale contained in the mortgage. A foreclosure auction was conducted in November, 2009; Green Tree was the highest bidder. The identity of the note holder at the time of the foreclosure sale is not known from the record. On November 24, 2009, Green Tree assigned the rights to its bid to Fannie Mae, and a foreclosure deed was recorded in the Suffolk County registry of deeds.

On January 25, 2010, Fannie Mae commenced a summary process action in the Boston division of the Housing Court Department to evict Eaton. Eaton filed a counterclaim, arguing that the underlying foreclosure sale was invalid because Green Tree did not hold Eaton's mortgage note at the time of the foreclosure sale and therefore lacked the requisite authority to foreclose on her equity of redemption in the Roslindale property. A Housing Court judge subsequently granted a sixty-day stay of the summary process action to give Eaton an opportunity to seek relief in the Superior Court. The Housing Court judge also ordered Eaton to make use and occupancy payments during the pendency of her action. On April 8, 2011, Eaton filed a complaint in the Superior Court for injunctive and declaratory relief. The complaint  [*7] sought a declaration that the foreclosure sale of Eaton'shome and the subsequent foreclosure deed were null and void, and that Eaton was the owner in fee simple of the Roslindale property; a preliminary injunction to stay the summary process action in the Housing Court; and a permanent injunction barring Fannie Mae from taking steps to obtain possession of or convey the Roslindale property. For the purposes of Eaton's motion for a preliminary injunction only, the defendants stipulated that Green Tree did not hold Eaton's mortgage note at the time of the foreclosure. After hearing, the Superior Court judge (motion judge) allowed the motion and preliminarily enjoined Fannie Mae from proceeding with Eaton'seviction.

2. Standard of review. We review the grant or denial of a preliminary injunction for abuse of discretion.Commonwealth v. Fremont Inv. & Loan, 452 Mass. 733, 741 (2008). The conclusions of law of the judge below are "subject to broad review and will be reversed if incorrect." Packaging Indus. Group, Inc. v. Cheney, 380 Mass. 609, 616 (1980), quoting Buchanan v. United States Postal Serv., 508 F.2d 259, 267 n.24 (5th Cir. 1975). In considering a request for a preliminary  [*8] injunction the judge evaluates the moving party's chance of success on the merits and its claim of injury. Packaging Indus. Group, Inc. v. Cheney, supra at 617. Because the defendants do not dispute the likelihood of irreparable harm to Eaton if Fannie Mae proceeds to seek her eviction through the summary process action, we confine our discussion to evaluating Eaton's likelihood of prevailing on the merits of her claim.

3. Discussion. As indicated, the motion judge determined that a foreclosure by sale requires the foreclosing mortgagee, at the time of the sale, to hold both the mortgage and the underlying mortgage note; and that if the mortgagee does not hold the note, the foreclosure sale is void. Based on this view, she concluded that because Green Tree, the assignee of the mortgage, had stipulated that it did not hold the mortgage note executed by Eaton when the sale took place, Eaton was likely to succeed in proving that the foreclosure sale was void and that the defendants had no authority to evict her and take possession of her home. See Bank of N.Y. v. Bailey, 460 Mass. 327, 333 (2011) (challenging evicting party's entitlement to possession "has long been considered a valid  [*9] defense to a summary process action for eviction where the property was purchased at a foreclosure sale"). The defendants argue that in reaching this conclusion, the judge misread the Massachusetts common law, and that, in any event, the statutory scheme applicable to exercise of a power of sale gave Green Tree absolute authority, as "mortgagee," to foreclose. They also claim that Green Tree, as the assignee, had a contractual right to foreclose pursuant to the express terms of the mortgage. We begin with a brief overview of the common law of mortgages and then address the statutes governing exercise of a power of sale in a mortgage. Finally, we review the preliminary injunction in light of the relevant principles discussed and the terms of Eaton's mortgage.

a. Common law. A real estate mortgage in Massachusetts has two distinct but related aspects: it is a transfer of legal title to the mortgage property, and it serves as security for an underlying note or other obligation -- that is, the transfer of title is made in order to secure a debt, and the title itself is defeasible when the debt is paid. See U.S. Bank Nat'l Ass'n v. Ibanez, 458 Mass. 637, 649 (2011) (Ibanez) (Massachusetts  [*10] is a "title theory" State in which "a mortgage is a transfer of legal title in a property to secure a debt"); Perry v. Miller, 330 Mass. 261, 263 (1953), and cases cited (legal title held by mortgagee is "defeasible upon the payment of money or the performance of some other condition"); Goodwin v. Richardson, 11 Mass. 469, 475 (1814)(mortgage deed "purports to convey to the mortgagee a present estate in fee simple, defeasible on the performance of a certain condition by the mortgagor"). See also Negron v. Gordon, 373 Mass. 199, 204 (1977) ("[T]he mortgagee holds bare legal title to the property subject to defeasance on the mortgagor's performance of the obligation secured by the mortgage. It is only for the purpose of securing the debt that the mortgagee is to be considered owner of the property" [citations omitted]); Young v. Miller, 6 Gray 152, 153 (1856) ("The true character of a mortgage is the pledge of real estate to secure the payment of money, or the performance of some other obligation"); Maglione v. BancBoston Mtge. Corp., 29 Mass. App. Ct. 88, 90 (1990) ("So it is that the mortgagor retains an equity of redemption, and upon payment of the note by the mortgagor or upon performance  [*11] of any other obligation specified in the mortgage instrument, the mortgagee's interest in the real property comes to an end" [citations omitted]).

Following from these principles, a mortgage separated from the underlying debt that it is intended to secure is "a mere technical interest." Wolcott v. Winchester, 15 Gray 461, 465 (1860). See Morris v. Bacon, 123 Mass. 58, 59 (1877) ("That the debt is the principal and the mortgage an incident, is a rule too familiar to require citations in support of it"). However, in contrast to some jurisdictions, in Massachusetts the mere transfer of a mortgage note does not carry with it the mortgage. See Barnes v. Boardman, 149 Mass. 106, 114 (1889). See also 1 F. Hilliard, Mortgages 221 (2d ed. 1856) ("The prevailing doctrine upon this subject undoubtedly is, that an assignment of the debt carries the mortgage with it. This rule, however, is by no means universal, and is subject to various qualifications in the different States of the Union"). As a consequence, in Massachusetts a mortgage and the underlying note can be split. See Lamson & Co. v. Abrams, 305 Mass. 238, 245 (1940) ("The holder of the mortgage and the holder of the note may be different  [*12] persons").

Under our common law, where a mortgage and note are separated, "the holder of the mortgage holds the mortgage in trust for the purchaser of the note, who has an equitable right to obtain an assignment of the mortgage, which may be accomplished by filing an action in court and obtaining an equitable order of assignment." Ibanez, 458 Mass. at 652, citing Barnes v. Boardman, 149 Mass. at 114. See Wolcott v. Winchester, 15 Gray at 465 ("The party holding such legal estate [i.e., mortgagee holding only mortgage without underlying note] no doubt holds the same in trust for the party owning the debt, where the entire debt secured by a mortgage has been parted with"); Young v. Miller, 6 Gray at 154 (where indorsee of note is without assignment of mortgage securing the note, "the law may well imply the intention of the parties that the mortgage is thenceforth to be held by the mortgagee in trust for the indorsee. In other words, such a transaction might manifest a resulting trust"); Sanger v. Bancroft, 12 Gray 365, 367 (1859) ("A mortgage cannot be made available without connecting it with the debt or duty secured thereby. To one who has not the debt, it is of no value as property,  [*13] as it could at most be only resorted to as a trust for the benefit of the holder of the note"). See generally 1 F. Hilliard, Mortgages at 216 n.(c) ("The assignment of a mortgage, without the debt, creates at most a naked trust" [emphasis in original]); id. at 217 ("[The mortgage] has no determinate value. If it should be assigned, the assignee must hold the interest at the will and disposal of the creditor who holds the bond"). 

Consistent with the principles just described -- that is, the basic nature of a mortgage as security for an underlying mortgage note, and the role of a "bare" mortgagee as equitable trustee for the note holder -- it appears that, at common law, a mortgagee possessing only the mortgage was without authority to foreclose on his own behalf the mortgagor's equity of redemption or otherwise disturb the possessory interest of the mortgagor. See Howe v. Wilder, 11 Gray 267, 269-270 (1858) (former assignee of mortgage note and mortgage who had retransferred note and canceled unrecorded mortgage assignment might still hold technical legal title to mortgage property as mortgagee but has no equitable right to disturb mortgagor's possessory interest and cannot bring action  [*14] to foreclose mortgagor's equity of redemption because no money is due from mortgagor to him; only mortgagee with interest in underlying debt can so enforce mortgage). See also Wolcott v. Winchester, 15 Gray at 465 ("As a purchaser [of a mortgage without the underlying note], [defendant] must have known that the possession of the debt was essential to an effective mortgage, and that without it he could not maintain an action to foreclose the mortgage"). Cf. Weinberg v. Brother, 263 Mass. 61, 62 (1928)

b. Statutory provisions. The defendants take issue with the applicability of decisions such as Wolcott v. Winchester, 15 Gray at 465, Crowley v. Adams, 226 Mass. 582, 585 (1917), and Howe v. Wilder, 11 Gray at 269-270, to this case. They argue that in any event, G. L. c. 244, § 14, expressly authorized MERS (and its assignee) to foreclose because the mortgage in this case contained a power of sale. Accordingly, we turn to this statute, as well as related statutory provisions that together govern mortgage foreclosures under a power of sale.

It has long been recognized that statutes are a key source of authority generally governing mortgages. See Fay v. Cheney, 14 Pick. 399, 400-401 (1833)  [*15] ("The law of mortgage in this [C]ommonwealth, is a mixed system, derived partly from the common law in regard to real property, partly from the rules and maxims of the English [C]ourts of [C]hancery, but principally from various statutes"). Statutes play an especially significant role in connection with mortgage foreclosures effected under a power of sale. See Ibanez, 458 Mass. at 646, quoting Moore v. Dick, 187 Mass. 207, 211 (1905) ("one who sells under a power [of sale] must follow strictly [statutory] terms").

The "statutory power of sale" is set out in G. L. c. 183, § 21. Under this statute, if a mortgage provides for a power of sale, the mortgagee, in exercising the power, may foreclose without obtaining prior judicial authorization "upon any default in the performance or observance" of the mortgage, id., including, of course, nonpayment of the underlying mortgage note. , Section 21 provides, however, that for a foreclosure sale pursuant to the power to be valid, the mortgagee must "first comply[] with the terms of the mortgage and with the statutes relating to the foreclosure of mortgages by the exercise of a power of sale." See Moore v. Dick, 187 Mass. 207, 211-213 (1905) (where  [*16] notice of foreclosure sale was given in newspaper other than one named in mortgage agreement's power of sale, foreclosure was void, and plaintiffs were entitled to redeem mortgaged property approximately twenty years after sale; laches is no defense to void sale). See alsoTamburello v. Monahan, 321 Mass. 445, 446-447 (1947) (where foreclosure sale conducted in bank office nine-tenths of one mile from mortgaged premises, sale was not "on or near the premises" as required by G. L. c. 183, § 21; sale held void).

In addition to G. L. c. 183, § 21, itself, the "statutes relating to the foreclosure of mortgages by the exercise of a power of sale," id., are set out in G. L. c. 244, §§ 11-17C. See Ibanez, 458 Mass. at 645-646. Principal among these is c. 244, § 14 (§ 14), which provides in relevant part:

"The mortgagee or person having his estate in the land mortgaged, or a person authorized by the power of sale, . . . may, upon breach of condition and without action, do all the acts authorized or required by the power; but no sale under such power shall be effectual to foreclose a mortgage, unless, previous to such sale, [the notice provisions set forth in this section are followed ]" (emphasis  [*17] added).

The defendants argue that by its plain, unambiguous terms, this section authorized Green Tree, as the assignee of MERS, to foreclose because Eaton's mortgage identified MERS, its successors and assigns as the "mortgagee" with the "power of sale." We disagree that § 14 is unambiguous. The section is one in a set of provisions governing mortgage foreclosures by sale, and that set in turn is one component of a chapter of the General Laws devoted generally to the topic of foreclosure and redemption of mortgages. The term "mortgagee" appears in several of these statutes, and its use reflects a legislative understanding or assumption that the "mortgagee" referred to also is the holder of the mortgage note. Thus, G. L. c. 244, § 17B, one of the foreclosure by sale sections closely related to § 14, deals with the notice required to be given as a condition to seeking a deficiency owed on a note after a foreclosure sale, and reads in part:

"No action for a deficiency shall be brought . . . by the holder of a mortgage note or other obligation secured by mortgage of real estate after a foreclosure sale by him . . . unless a notice in writing of the mortgagee's intention to foreclose the  [*18] mortgage has been mailed, postage prepaid, by registered mail with return receipt requested, to the defendant sought to be charged with the deficiency at his last address then known to the mortgagee, together with a warning of liability for the deficiency, in substantially the form [set out in this section] . . ." (emphasis added).

By its terms, § 17B assumes that the holder of the mortgage note and the holder of the mortgage are one and the same; the section's drafters appear to have used the terms "holder of a mortgage note" and "mortgagee" interchangeably. Moreover, the statutory form of the notice required by § 17B bolsters our interpretation of § 17B; the statutory form language plainly envisions that the foreclosing mortgagee ("the mortgage held by me") and the note holder ("you may be liable to me in case of a deficiency") are one. And the same underlying assumption -- that is, an identity between the mortgagee and the underlying note holder -- also underlies several other sections in c. 244. See, e.g., G. L. c. 244, § 19 (providing that person entitled to redeem mortgage property "shall pay or tender to the mortgagee" amount due and payable "on the mortgage"); § 20 (requiring  [*19] "mortgagee" who has been in possession of mortgage property to account for rents, profits, and expenses, and directing that any account balance be deducted from or added to amount "due on the mortgage");§ 23 (authorizing court to determine what amount not in dispute is "due on the mortgage," and to order it paid to "mortgagee").

"Where the Legislature uses the same words in several sections which concern the same subject matter, the words 'must be presumed to have been used with the same meaning in each section.'" Commonwealth v. Wynton W., 459 Mass. 745, 747 (2011), quoting Insurance Rating Bd. v. Commissioner of Ins., 356 Mass. 184, 188-189 (1969). See Booma v. Bigelow-Sanford Carpet Co., 330 Mass. 79, 82 (1953) ("It is a familiar canon of construction, that when similar words are used in different parts of a statute, the meaning is presumed to be the same throughout"). Furthermore, we "construe statutes that relate to the same subject matter as a harmonious whole and avoid absurd results." Connors v. Annino, 460 Mass. 790, 796 (2011), quoting Canton v. Commissioner of the Mass. Highway Dep't, 455 Mass. 783, 791-792 (2010). See Adoption of Marlene, 443 Mass. 494, 500 (2005), quoting  [*20] Ciardi v. F. Hoffmann-La Roche, Ltd., 436 Mass. 53, 62 (2002) ("Statutes addressing the same subject matter clearly are to be construed harmoniously so as to give full effect to all of their provisions and give rise to a consistent body of law").

In accordance with these principles, and against the background of the common law as we have described it in the preceding section, we construe the term "mortgagee" in G. L. c. 244, § 14, to mean a mortgagee who also holds the underlying mortgage note. , The use of the word "mortgagee" in § 14 has some ambiguity, but the interpretation we adopt is the one most consistent with the way the term has been used in related statutory provisions and decisional law, and, more fundamentally, the one that best reflects the essential nature and purpose of a mortgage as security for a debt. See Negron v. Gordon, 373 Mass. at 204, and cases cited;Maglione v. BancBoston Mtge. Corp., 29 Mass. App. Ct. at 90, and cases cited. See generally Restatement (Third) of Property (Mortgages) § 1.1 comment (1997) ("The function of a mortgage is to employ an interest in real estate as security for the performance of some obligation. . . . Unless it secures an obligation,  [*21] a mortgage is a nullity"). , 

Contrary to the conclusion of the motion judge, however, we do not conclude that a foreclosing mortgagee must have physical possession of the mortgage note in order to effect a valid foreclosure. There is no applicable statutory language suggesting that the Legislature intended to proscribe application of general agency principles in the context of mortgage foreclosure sales. Accordingly, we interpret G. L. c. 244, §§ 11-17C (and particularly § 14), and G. L. c. 183, § 21, to permit one who, although not the note holder himself, acts as the authorized agent of the note holder, to stand "in the shoes" of the "mortgagee" as the term is used in these provisions. 

The defendants and several amici argue, to varying degrees, that an interpretation of "mortgagee" in the statutes governing mortgage foreclosures by sale that requires a mortgagee to hold the mortgage note will wreak havoc with the operation and integrity of the title recording and registration systems by calling into question the validity of any title that has a foreclosure sale in the title chain. This follows, they claim, because although a foreclosing mortgagee must record a foreclosure deed  [*22] along with an affidavit evidencing compliance with G. L. c. 24, § 14, see G. L. c. 244, § 15; see also G. L. c. 183, § 4, there are no similar provisions for recording mortgage notes; and as a result, clear record title cannot be ascertained because the validity of any prior foreclosure sale is not ascertainable by examining documents of record. They argue that if this court requires a mortgagee to have a connection to the underlying debt in order to effect a valid foreclosure, such a requirement should be given prospective effect.

In general, when we construe a statute, we do not engage in an analysis whether that interpretation is given retroactive or prospective effect; the interpretation we give the statute usually reflects the court's view of its meaning since the statute's enactment. See McIntyre, petitioner, 458 Mass. 257, 261 (2010), cert. denied, 131 S. Ct. 2909 (2011). However, there are several considerations that compel us to give the interpretation of "mortgagee" we announce here only prospective effect. As the previous discussion reflects, the use of the term "mortgagee" in the statutory scheme governing mortgage foreclosures was not free of ambiguity, and while the decisions  [*23] of this court in years and centuries past provide support for the general proposition that, under our common law, a mortgage ultimately depends on connection with the underlying debt for its enforceability, none of our cases has considered directly the question whether a mortgagee must also hold the note or act on behalf of the note holder in order to effect a valid foreclosure by sale. It has been represented to us by the defendants and several amici that lawyers and others who certify or render opinions concerning real property titles have followed in good faith a different interpretation of the relevant statutes, viz., one that requires the mortgagee to hold only the mortgage, and not the note, in order to effect a valid foreclosure by sale. We have no reason to reject this representation of prior practice, and in that context, we recognize there may be significant difficulties in ascertaining the validity of a particular title if the interpretation of "mortgagee" that we adopt here is not limited to prospective operation, because of the fact that our recording system has never required mortgage notes to be recorded.

This court traditionally has given prospective effect to its decisions  [*24] in very limited circumstances, but those have included circumstances where the ruling announces a change that affects property law. SeePapadopoulos v. Target Corp., 457 Mass. 368, 385 (2010)Payton v. Abbott Labs, 386 Mass. 540, 565 (1982). In the property law context, we generally apply our decisions prospectively out of "concern for litigants and others who have relied on existing precedents." Id. See Powers v. Wilkinson, 399 Mass. 650, 662 (1987). In addition, there may be particular reason to give a decision prospective effect where -- as the argument is made here -- "prior law is of questionable prognosticative value." Blood v. Edgar's, Inc., 36 Mass. App. Ct. 402, 407 (1994). Where a decision is not grounded in constitutional principles, but instead announces "a new common-law rule, a new interpretation of a State statute, or a new rule in the exercise of our superintendence power, there is no constitutional requirement that the new rule or new interpretation be applied retroactively, and we are therefore free to determine whether it should be applied only prospectively." Commonwealth v. Dagley, 442 Mass. 713, 721 n.10 (2004), cert. denied, 544 U.S. 930 (2005). In the exceptional  [*25] circumstances presented here, and for the reasons that we have discussed, we exercise our discretion to hold that the interpretation of the term "mortgagee" in G. L. c. 244, § 14, and related statutory provisions that we adopt in this opinion is to apply only to mortgage foreclosure sales for which the mandatory notice of sale has been given after the date of this opinion. 

c. Preliminary injunction. Although we apply the rule articulated in this case prospectively, we nonetheless apply it to Green Tree's appeal because it has been argued to this court by Eaton. See Bouchard v. DeGagne, 368 Mass. 45, 48-49 (1975) (party seeking relief may be entitled to benefit from rule announced in case, even when other "somewhat similarly situated [parties] are not afforded the benefit of retroactive application of the principles established by that first appellate determination"). Cf. Tucker v. Badoian, 376 Mass. 907, 918-919 (1978) (Kaplan, J., concurring) (suggesting that when newly announced rule is given prospective effect, that rule may still apply to the case at bar if parties raised issue; declining to apply new rule, however, where parties appeared to accept that old rule would apply to  [*26] them). See generally Powers v. Wilkinson, 399 Mass. at 663-665 (Abrams, J., concurring in part and dissenting in part) (discussing reasons in favor of applying new rule given general prospective application to particular litigants involved).

The motion judge granted the preliminary injunction based on her determination that as a matter of still applicable common law, for a foreclosure by sale to be valid, the mortgage and the mortgage note must be unified physically in the possession of the foreclosing mortgagee. We have focused principally on the statutes governing mortgage foreclosure by sale and have concluded that where a mortgagee acts with the authority and on behalf of the note holder, the mortgagee may comply with these statutory requirements without physically possessing or actually holding the mortgage note. Eaton's verified complaint alleges that at the time of foreclosure in this case, Green Tree, as assignee of MERS, was neither in possession of Eaton's mortgage note nor "authorized by the holder of the note to carry out the foreclosure." However, Eaton makes this allegation solely on "information and belief." As a general rule, an allegation that is supported on "information  [*27] and belief" does not supply an adequate factual basis for the granting of a preliminary injunction. See Alexander & Alexander, Inc. v. Danahy, 21 Mass. App. Ct. 488, 493-494 (1986), and cases cited (noting that although preliminary injunction may be based on affidavits and verified complaint, allegations based only on information and belief would be insufficient to support preliminary injunction). See also M.G. Perlin & S.H. Blum, Procedural Forms Annotated § 106:1 (6th ed. 2009).

The motion judge's decision on the preliminary injunction does not consider the question of Green Tree's (or MERS's) authority to act on behalf of BankUnited or an assignee of BankUnited in initiating foreclosure proceedings, and our examination of the Superior Court record suggests that this issue was not raised below. In the circumstances, we conclude that Eaton's allegation on information and belief that Green Tree was not authorized by the note holder to carry out the foreclosure sale did not offer an adequate factual basis to support the preliminary injunction that was issued. Consequently, the order granting the preliminary injunction must be vacated. On remand, Eaton may renew her request for a preliminary  [*28] injunction, and in that context seek to show that she has a reasonable likelihood of establishing that, at the time of the foreclosure sale, Green Tree neither held the note nor acted on behalf of the note holder. 

4. Conclusion. We vacate the grant of the preliminary injunction, and remand the case to the Superior Court for further proceedings consistent with this opinion.

So ordered.