Opinion ID: 2783518
Heading Depth: 2
Heading Rank: 2

Heading: Junior Foreclosure

Text: [¶16] In order to answer the certified question, we must first classify the nature of the right Bank of America received from its junior foreclosure. We review questions of law, including those certified to us by the federal court, de novo. Fortin, 2013 ME 14, ¶ 7, 60 A.3d 765. “In Maine, foreclosure is a creature of statute,” Bank of Am., N.A. v. Greenleaf, 2014 ME 89, ¶ 8, 96 A.3d 700, and 14 M.R.S. § 6321 (2014) governs the commencement of a foreclosure action. The relevant portion of section 6321 states: 9 After breach of condition of any mortgage other than one of the first priority, the mortgagee or any person claiming under the mortgagee may proceed for the purpose of foreclosure by a civil action against all parties in interest, except for parties in interest having a superior priority to the foreclosing mortgagee, in either the Superior Court or the District Court in the division in which the mortgaged premises or any part of the mortgaged premises is located. Parties in interest having a superior priority may not be joined nor will their interests be affected by the proceedings, but the resulting sale under section 6323 is of the defendant or mortgagor’s equity of redemption only. The plaintiff shall notify the priority parties in interest of the action by sending a copy of the complaint to the parties in interest by certified mail. (Emphasis added.) [¶17] We have explained the nature of the equity of redemption as follows: In ordinary cases the mortgagor conveys to the mortgagee the title to real estate as security for a debt. There remains in the mortgagor the right to pay the debt, and thereby redeem the property mortgaged. The process of foreclosure cuts off this right, and vests the title absolutely in the mortgagee. The same thing is true of a second mortgage, which is but a mortgage of the equity of redemption. The whole equity [of redemption] is conveyed to the mortgagee, the same as the whole title is conveyed to the first mortgagee. The right remaining in the mortgagor is a right to redeem the equity of redemption. That right carries with it, as an incident to it, a right to redeem the first mortgage. Now when the second mortgagee forecloses the mortgagor, the whole equity of redemption vests in him, precisely as the whole estate vests in the first mortgagee after foreclosure, and he alone is entitled to redeem the first mortgage. Smith v. Varney, 309 A.2d 229, 232 (Me. 1973) (emphasis added) (quotation marks omitted). 10 [¶18] When Bank of America obtained the junior foreclosure judgment on May 10, 2010, what it received was Everest’s equity of redemption for the senior mortgage. Bank of America did not sell this interest within the specified time period pursuant to 14 M.R.S. § 6323 (2014), nor did it appear in the senior foreclosure to assert its interest in redeeming the senior mortgage within the redemption period. Howison, 2014 WL 2472117, at -2. As we discussed almost ten years ago, in order to assert its rights, the junior mortgagee must appear in the senior foreclosure action: By the terms of section 6321 a sale of property that has been judicially foreclosed does not convey the premises free and clear of a recorded interest if the holder of that interest is not made a party to the action. Naming the junior mortgagee as a party in interest in a foreclosure action and serving of process provides notice of the imminent foreclosure proceedings. Once notified of the senior mortgagee’s intention to foreclose against the property, the junior mortgagee has the opportunity to appear in the action and have the court determine, pursuant to section 6322 . . . the “order of priority and those amounts, if any, that may be due to other parties that may appear.” Section 6322 also provides that after a hearing, if the court determines a breach of a condition in the primary mortgage has occurred, “a judgment of foreclosure and sale shall issue providing that if the mortgagor, his successors, heirs and assigns do not pay the sum that the court adjudges to be due and payable, with interest within the period of redemption, the mortgagee shall proceed with a sale as provided.” The same right of redemption is preserved to the junior mortgagee by section 6205. 11 U.S. Dep’t of Hous. & Urban Dev. v. Union Mortg. Co., 661 A.2d 163, 165-66 (Me. 1995) (emphasis added). In light of Bank of America’s inaction, the question is whether it nonetheless retained any right to redemption.