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14-P-1898 Appeals Court

GURU JIWAN SINGH KHALSA & another1 vs. SOVEREIGN BANK, N.A.

No. 14-P-1898.

Suffolk. November 2, 2015. - January 11, 2016.

Present: Milkey, Carhart, & Massing, JJ.

Mortgage, Foreclosure, Real estate. Real Property, Mortgage.

Negotiable Instruments, Note. Agency, What constitutes.

Civil action commenced in the Superior Court Department on 

January 8, 2013.

The case was heard by Robert B. Gordon, J., on motions for 

summary judgment.

James L. Rogal for the defendant.

Leonard M. Singer for the plaintiffs.

MASSING, J. To effect a valid foreclosure sale, the 

foreclosing mortgage holder must also hold the underlying note 

or be acting on behalf of the note holder. Eaton v. Federal 

Natl. Mort. Assn., 462 Mass. 569, 571 (2012) (Eaton). This 

appeal requires us to consider how a mortgagee may show that it 

 

1 Gunbhushan Kaur.
2

is acting "as the authorized agent of the note holder," id. at

586, for summary judgment purposes.

On cross motions for summary judgment, a judge of the 

Superior Court judge entered a declaratory judgment in favor of 

the plaintiff borrowers, Khalsa and Kaur, and against the 

defendant mortgagee, Sovereign Bank, N.A. (Sovereign), declaring 

that the foreclosure sale of the plaintiffs' residence was void

because Sovereign had failed to show that it was acting as the 

authorized agent of the note holder, Federal Home Loan Mortgage 

Corporation (Freddie Mac). Sovereign appeals. Because the 

summary judgment materials create a genuine issue of fact 

concerning Sovereign's authorization to foreclose on Freddie 

Mac's behalf, we vacate the judgment and remand the case for 

further proceedings.

Background. On April 2, 2008, the plaintiffs executed a 

promissory note payable to Sovereign in the original principal 

amount of $274,000 to finance the purchase of their home in 

Millis. To secure the note, the plaintiffs granted Sovereign a 

mortgage on the property. Shortly thereafter, Freddie Mac 

purchased the note from Sovereign, retaining Sovereign as 

servicer of the note and mortgage.

On April 22, 2011, Sovereign notified the plaintiffs that 

they were in default on their loan for nonpayment. Sovereign 

held a foreclosure sale on January 18, 2013. Although Sovereign 
3

held itself out as the "Lender" in the default notice, the note 

had been indorsed in blank, and at the time of the sale, Freddie 

Mac had physical possession of the note. See G. L. c. 106, § 3-

205(b), inserted by St. 1998, c. 24, § 8 ("When indorsed in 

blank, an instrument becomes payable to bearer and may be 

negotiated by transfer of possession alone until specially 

indorsed"). Sovereign purchased the property at the foreclosure 

auction and sold its bid to Freddie Mac.

Meanwhile, the plaintiffs had filed a complaint in the 

Superior Court on January 8, 2013, seeking to enjoin the 

foreclosure sale and a declaration that Sovereign was not 

entitled to foreclose because, among other alleged deficiencies, 

"Sovereign Bank does not have authority from the holder of the 

mortgage note given by the plaintiffs." After a hearing on the

plaintiffs' application for a preliminary injunction on January 

17, 2013, a judge denied relief, and the foreclosure sale went 

forward the following day. On November 5, 2013, a different 

judge denied Sovereign's first motion for summary judgment. 

Acting on subsequently-filed cross motions for summary judgment, 

on September 9, 2014, a third judge allowed the plaintiffs' 

motion, denied Sovereign's motion, and declared the foreclosure 

void.

Evidence of Sovereign's authority to foreclose. The only 

contested issue in this case is whether Sovereign, which was the 
4

holder of the mortgage but not the note, acted with Freddie 

Mac's authority to conduct the foreclosure sale. On this point, 

in connection with its first motion for summary judgment,

Sovereign submitted the affidavit of Alan L. Norris, a default 

operations analyst at Sovereign.

2 Based on his review of 

Sovereign's file concerning the plaintiffs' mortgage, Norris 

stated "to the best of [his] knowledge and belief" that Freddie 

Mac purchased the plaintiffs' loan on May 13, 2008, "with 

Sovereign retaining the servicing of the Loan." He added, 

"Sovereign is the mortgagee of record, the servicer of the Loan, 

and the holder of the Note."3 He asserted in his affidavit that 

"[t]he relationship between Freddie Mac and the Seller/Servicers 

of its loans is governed by the Freddie Mac Single Family 

Seller/Servicer Guide . . ." (guide).4 He further stated, 

 

2 The Norris affidavit, dated January 17, 2013, was the same 

document that Sovereign had filed in its successful opposition 

to the plaintiffs' application to preliminarily enjoin the 

foreclosure sale.

3 Norris's representation that Sovereign was the holder of 

the note was incorrect. The judge who denied the plaintiffs' 

motion for a preliminary injunction relied in part on this 

statement in allowing the foreclosure to proceed. Sovereign 

later contradicted Norris's representation with its admission 

that Freddie Mac, not Sovereign, had physical possession of the 

note at the time of the sale.

4 The affidavit included a reference to a Web site address 

for the Seller/Servicer Guide that is no longer valid. The 

judge who denied Sovereign's first motion for summary judgment 

commented that Sovereign's "suggestion that the Guide is 

available online is absurd." He continued, "In any event, 
5

"Freddie Mac, as owner of the Note, has authorized Sovereign to 

act on its behalf."

Norris did not refer to any particular document in the 

file, nor did Sovereign submit any documentary evidence to 

support this assertion. The judge who denied Sovereign's first 

motion for summary judgment declined to credit Norris's 

"unsupported statement, based on no apparent personal 

knowledge."

In its second motion for summary judgment, Sovereign 

supplemented the Norris affidavit with the affidavit of Dean 

Meyer, an assistant treasurer of Freddie Mac, who also based his 

affidavit "on a review of the loan records for the property." 

Regarding Sovereign's authorization to act on Freddie Mac's 

behalf in the foreclosure sale, Meyer also cited the guide,

which, he repeated, "governs the relationship between a 

Seller/Servicer and Freddie Mac relating to the sale and 

servicing of mortgages." Meyer stated in paragraph five of the 

affidavit, "When a borrower defaults, Freddie Mac authorizes a 

servicer to initiate foreclosure proceedings in accordance with 

the Guide." Meyer concluded in paragraph six, "As a result of 

the plaintiffs' default on their mortgage, Sovereign, as a 

 

making it ostensibly available online is no substitute for 

including it, or any relevant excerpts, in the summary judgment 

record."
6

Freddie Mac servicer, was authorized to conduct foreclosure 

proceedings against the Plaintiffs."

The guide is 2,799 pages long. Meyer's affidavit did not 

identify exactly where in the guide Freddie Mac authorized 

Sovereign in particular, or any seller/servicers in general, to 

act on its behalf to initiate foreclosure proceedings or conduct 

foreclosure sales. In his memorandum and order allowing the 

plaintiffs' cross motion for summary judgment, the judge 

commented that "one is left to speculate as to how (if at all) 

Mr. Meyer has any personal knowledge of the facts he asserts." 

Because Meyer purported to state the content of the guide 

without producing the relevant pages, the motion judge allowed 

plaintiffs' motion to strike paragraph five as violating the 

best evidence rule. See Mass. G. Evid. § 1002 (2015).

The record on Sovereign's second motion for summary 

judgment included two pages from the guide, which Norris, 

testifying as Sovereign's designee in a deposition conducted 

pursuant to Mass.R.Civ.P. 30(b)(6), 365 Mass. 780 (1974), stated 

were "the only thing in the seller/servicer guide that Sovereign 

Bank is relying upon as authority to foreclose the [plaintiffs'] 

mortgage." As Sovereign conceded at oral argument on appeal, 

neither page establishes that Sovereign was acting on behalf of 

Freddie Mac. The motion judge ruled that Sovereign had failed 

to present any competent evidence establishing that Sovereign 
7

was authorized to act as Freddie Mac's agent when it initiated 

the foreclosure sale. Accordingly, the judge denied Sovereign's 

motion for summary judgment and allowed the plaintiffs' motion.

Discussion. Under Eaton, 462 Mass. at 571, "a foreclosure 

by power of sale pursuant to G. L. c. 183, § 21, and G. L. 

c. 244, §§ 11-17C, is invalid unless a foreclosing party holds 

the mortgage and also either holds the underlying mortgage note 

or acts on behalf of the note holder." Galiastro v. Mortgage 

Electronic Registration Sys., Inc., 467 Mass. 160, 161 (2014).5 

The question before us is whether a genuine factual dispute 

exists as to whether Sovereign was acting "as the authorized 

agent of the note holder." Eaton, supra at 586. While the 

judge did not err in identifying the shortcomings in Sovereign's 

materials and, accordingly, denying Sovereign's motion for

summary judgment, these shortcomings did not entitle the 

plaintiffs to summary judgment in their favor.

General agency principles apply in the context of mortgage 

foreclosure sales. Ibid. An agency relationship "arises 'from 

the manifestation of consent by one person to another that the 

other shall act on his behalf and subject to his control, and 

 

5 This rule applies only to mortgage foreclosure sales for 

which the mandatory notice of sale was given after June 22, 

2012, the date of the Eaton decision, and to cases pending on 

appeal on that date in which the issue had been preserved. See 

Eaton, supra at 589; Galiastro v. Mortgage Electronic 

Registration Sys., Inc., supra. This includes the case before 

us.
8

consent by the other so to act.'" Harrison Conference Servs. of 

Mass., Inc. v. Commissioner of Rev., 394 Mass. 21, 24 (1985), 

quoting from Restatement (Second) of Agency § 1(1) (1958).

Where the mortgage holder and note holder are not the same, 

the mortgage holder can demonstrate that it was authorized to 

act as the note holder's agent in a variety of ways. The task 

is simple if the mortgage holder can produce an instrument

executed by the note holder prior to the foreclosure proceedings

that expressly authorizes the mortgage holder to foreclose on 

the particular loan. Sufficient proof would be similarly

straightforward if the mortgage holder could produce a document 

from the note holder, predating the foreclosure, generally 

authorizing the mortgage holder to act in its discretion as the 

note holder's agent for the purpose of foreclosing on a series 

of mortgages that included the borrower's. Providing the 

requisite proof is more challenging where, as here, a loanspecific preforeclosure authorization apparently does not exist.

Through its affidavits, Sovereign attempted to show that 

its seller/servicer relationship with Freddie Mac included the 

authority to act on Freddie Mac's behalf to initiate and conduct 

foreclosure proceedings with respect to all the loans Sovereign 

serviced on Freddie Mac's behalf (which included the 

plaintiffs'). We agree with Sovereign that such proof could 

satisfy Eaton; that is, Sovereign could have shown that it 
9

possessed the requisite authority without pointing to any 

preforeclosure instrument expressly authorizing it to foreclose.

To prevail on its motion for summary judgment, however, 

Sovereign had to establish that no genuine issue of material 

fact existed concerning such an agency relationship with Freddie 

Mac and that it was therefore entitled to judgment as matter of 

law. DeWolfe v. Hingham Centre, Ltd., 464 Mass. 795, 799

(2013). The affidavits that Sovereign produced in an effort to 

support its assertions did not satisfy the requirements of 

Mass.R.Civ.P. 56(e), 365 Mass. 824 (1974), which requires

affidavits "made on personal knowledge" that "set forth such 

facts as would be admissible in evidence." See Polaroid Corp. 

v. Rollins Envtl. Servs. (NJ), Inc., 416 Mass. 684, 696 (1993) 

("bare assertions and conclusions regarding a company officer's 

understandings, beliefs, and assumptions are not enough to 

withstand a well-pleaded motion for summary judgment"); Haverty

v. Commissioner of Correction, 437 Mass. 737, 754 (2002), S.C., 

440 Mass. 1 (2003) ("generalized statements . . . devoid of 

specific details" insufficient). For example, as noted, the 

judge ruled that Meyer's affidavit failed adequately to 

demonstrate the basis of his personal knowledge and violated the 
10

best evidence rule.

6 Norris's affidavit was similarly deficient. 

In other words, Sovereign's efforts to demonstrate its own 

entitlement to summary judgment failed not as a matter of theory 

but as a matter of proof.

Of course, Sovereign's failure to show that it was entitled

to summary judgment does not mean that the plaintiffs were

entitled to the allowance of their cross motion for summary 

judgment. See, e.g., Curly Customs, Inc. v. Bank of Boston, 

N.A., 49 Mass. App. Ct. 197, 199 (2000). With respect to their

motion for summary judgment, the plaintiffs as the moving party

had "the burden of demonstrating affirmatively the absence of a 

genuine issue of material fact on every relevant issue, 

regardless of who would have the burden on that issue at trial." 

Arcidi v. National Assn. of Govt. Employees, Inc., 447 Mass. 

616, 619 (2006).7 "This burden need not be met by affirmative 

 

6 Sovereign does not argue on appeal that the motion judge 

abused his discretion in striking paragraph five of Meyer's 

affidavit.

7 The Supreme Judicial Court has not addressed whether, in 

an action challenging the validity of a nonjudicial foreclosure 

under Eaton, the mortgagor who initiates the action carries the 

burden of proving at trial that the mortgagee is neither the 

holder of the note nor acting on behalf of the note holder, or 

whether the foreclosing mortgagee carries the burden of proving 

that it holds the note or is the note holder's authorized agent. 

In the preliminary injunction context, the mortgagor is required 

"to show that she has a reasonable likelihood of establishing 

that, at the time of the foreclosure sale, [the mortgage holder] 

neither held the note nor acted on behalf of the note holder." 

Eaton, 462 Mass. at 590. See Chartrand v. Newton Trust Co., 296 

Mass. 317, 320 (1936) ("The burden of proving that the sale was 
11

evidence negating an essential element of the plaintiff's case, 

but may be satisfied by demonstrating that proof of that element 

is unlikely to be forthcoming at trial." Flesner v. Technical 

Communications Corp., 410 Mass. 805, 809 (1991), citing 

Kourouvacilis v. General Motors Corp., 410 Mass. 706 (1991). 

Applied to this case, to prevail on summary judgment the 

plaintiffs had the burden to show that Sovereign's materials 

could not support an inference that its seller/servicer

relationship with Freddie Mac included the authority to 

foreclose on the plaintiffs' loan.

In evaluating whether the plaintiffs met their burden on 

this point, "we review the record in the light most favorable to 

the party against whom the judge allowed summary judgment, here 

[Sovereign]." Marhefka v. Zoning Bd. of Appeals of Sutton, 79 

Mass. App. Ct. 515, 516 (2011). "Any doubts as to the existence 

of a genuine issue of material fact are to be resolved against 

 

improperly conducted rested on the plaintiffs"). However, 

because the facts concerning the relationship between the 

mortgagee and the note holder are far more readily available to 

them, and because the statutory requirements governing 

nonjudicial foreclosures must be strictly adhered to, see U.S. 

Bank Natl. Assn. v. Ibanez, 458 Mass. 637, 646 (2011), it can be 

argued that once the mortgagor makes a plausible showing that 

the mortgagee does not hold the note and is not acting on behalf 

of the note holder, the mortgagee should carry the burden of 

proving that the foreclosure is valid under Eaton. We need not 

decide this issue, as the moving party carries the burden of 

proving the absence of any genuine issue of material fact for

the purposes of summary judgment.
12

the party moving for summary judgment." Milliken & Co. v. Duro 

Textiles, LLC, 451 Mass. 547, 550 n.6 (2008).

The plaintiffs presented affirmative proof that Sovereign 

did not hold the note when it foreclosed on the mortgage. 

Sovereign, in turn, presented materials intended to show that it 

possessed authority to act on the note holder's behalf. For the 

reasons set forth above, Sovereign's apparent inability to 

produce a preforeclosure instrument from Freddie Mac expressly 

authorizing it to foreclose on the plaintiffs' mortgage is not 

fatal to Sovereign's claim that it had the requisite authority. 

Although Sovereign failed at the summary judgment stage to 

identify the precise language in the complex seller/servicer 

agreement establishing conclusive proof of its authority, this 

does not mean that it would be unable to provide the requisite 

proof at trial.

Indeed, Sovereign's summary judgment materials included 

multiple indicators that it was acting as Freddie Mac's agent. 

The guide included detailed instructions on how to conduct 

foreclosures on Freddie Mac's behalf, strongly suggesting that 

Sovereign, as a seller/servicer, generally possessed the power 

to conduct foreclosures. In addition, the summary judgment 

record shows that after Sovereign was the highest bidder at the 

foreclosure sale, Freddie Mac purchased Sovereign's bid. Based 

on that course of events, a fact finder could infer that Freddie 
13

Mac had authorized Sovereign to go forward with the foreclosure.8 

While Sovereign's materials may amount to "at best a toehold to 

establish" its authority to act on Freddie Mac's behalf, "[a] 

toehold . . . is enough to survive a motion for summary 

judgment." Marr Equip. Corp. v. I.T.O. Corp. of New England, 14 

Mass. App. Ct. 231, 235 (1982).9

 

8 Sovereign suggests that Freddie Mac "ratified" Sovereign's 

agency status after the fact by purchasing Sovereign's bid. The 

ratification doctrine is inapt here, as it presumes, contrary to 

the requirements of Eaton, that at the time of the foreclosure 

sale, Sovereign was not authorized to act for Freddie Mac. See 

Licata v. GGNSC Malden Dexter LLC, 466 Mass. 793, 802 (2014), 

quoting from Linkage Corp. v. Trustees of Boston Univ., 425 

Mass. 1, 18, cert. denied, 522 U.S. 1015 (1997) ("Where an agent 

lacks actual authority" to act on a principal's behalf, the 

principal is nonetheless bound "if the principal acquiesces in 

the agent's action, or fails promptly to disavow the 

unauthorized conduct after disclosure of material facts").

9 The summary judgment record includes a third affidavit 

signed by Kristy Kochenash, a banking officer of Sovereign, who 

stated based on "personal knowledge" and her review of 

Sovereign's business records, "the Foreclosing Mortgagee was 

. . . [a]uthorized by the owner of the promissory note secured 

by the above mortgage to conduct the foreclosure sale." 

Kochenash's affidavit was titled an "Eaton Affidavit" and was 

filed in the registry of deeds three months after the 

foreclosure sale. See Eaton, supra at 589 & n.28 (suggesting

that, prospectively, foreclosing mortgagees could clarify the 

chain of title for subsequent purchasers by filing an affidavit

pursuant to G. L. c. 183, § 5B, in the registry of deeds stating 

that the mortgagee "either held the note or acted on behalf of 

the note holder at the time of the foreclosure sale"). The 

motion judge did not consider this affidavit because Sovereign 

never brought it to the judge's attention. See Dziamba v. 

Warner & Stackpole LLP, 56 Mass. App. Ct. 397, 399 (2002) 

(noting that Superior Court Rule 9A[b][5], the "anti-ferreting" 

rule, is designed to prevent "throw[ing] a foot-high mass of 

undifferentiated material at the judge"). Accordingly, we 
14

Conclusion. The judgment is vacated, and the case is 

remanded to the Superior Court for further proceedings.

So ordered.

 

decline to consider what effect this affidavit would have had on 

the cross motions for summary judgment.

We note that under "An Act preventing unlawful and 

unnecessary foreclosures," St. 2012, c. 194, effective November 

1, 2012, foreclosing mortgagees must file an affidavit in the 

registry of deeds "[p]rior to publishing a notice of foreclosure 

sale," certifying compliance with G. L. c. 244, § 35B, regarding 

good faith efforts to avoid foreclosure, and G. L. c. 244, 

§ 35C, regarding the mortgagee's status as either the holder of 

the note or the authorized agent of the note holder. These 

affidavits may be relied upon by "an arm's-length third party 

purchaser for value," but do not relieve the affiant from 

liability for failure to comply with these sections. G. L. 

c. 244, §§ 35B(b), (f), 35C(b). See St. 2015, c. 141, "An Act 

clearing titles to foreclosed properties" (allowing conclusive 

effect to affidavits demonstrating foreclosure complied with 

requirements of statutory power of sale three years after

recording of affidavit, unless challenged in court).