Led by partner Vincent Howard, our Moreno Valley foreclosure defense attorneys have followed with interest the issue of what courts can do when a property is wrongly foreclosed. This has come up in the highest court in Massachusetts, the Supreme Judicial Court, which found last fall that a buyer of a wrongly foreclosed home is not the true owner of the home. As you might imagine, this causes a mess for every party involved, with courts and parties then required to rethink what money, property and credit repair they owe to one another. That's why we were interested to see another ruling out of Massachusetts in In re Marmarinos, alleging a foreclosure sale should not have been made. The Bankruptcy Appellate Panel for the First U.S. Circuit Court of Appeal ultimately decided to dismiss as moot the pro se appeal of Fotis Frank Marmarinos, who opposed the compromise his Chapter 7 trustee made of claims against his mortgage holder.
Marmarinos owned real estate with two liens against it, owned by the Community Credit Union of Lynn. He originally filed for Chapter 13 bankruptcy, but the case was converted to Chapter 7 for reasons not described in the opinion. The credit union asked for and was granted relief from the automatic stay in order to foreclose on the second mortgage. At the subsequent foreclosure sale, it sold the property to itself. Marmarinos responded by filing a state-court case against the credit union, alleging violations of Massachusetts law and breach of its duty of good faith in the way it conducted the foreclosure sale. The trustee in his Chapter 7 case filed a motion in bankruptcy court seeking to compromise those claims for $20,000. Marmarinos opposed this, saying he believed the loans had been sold to Fannie Mae. After affidavits from the credit union's counsel and officers swearing it had retained the original notes and not sold the loans, the bankruptcy court approved to motion to compromise.
Marmarinos filed an appeal, representing himself. However, the First Circuit BAP ultimately agreed with the trustee, who said the appeal was moot because the compromise had already been accepted and the credit union had sold the property to a third party. Cases are declared moot when it's inequitable or impractical for the judiciary to provide any kind of relief, the panel said. In this case, Marmarinos never sought a stay of the ruling from the bankruptcy court or the BAP, the court said. Without such a stay, the bankruptcy trustee was entitled to rely on the bankruptcy court's order, which he did when he moved to dismiss the state-court action, the panel said. This consummated the compromise agreement with the credit union, making the appeal moot, the court said. Furthermore, the subsequent sale of the property to a third party makes it impossible for the panel to provide meaningful relief, as it has no power to invalidate the sale or return the property. Thus, it concluded that it had no jurisdiction over the appeal.
Vincent Howard and our Irvine foreclosure defense lawyers suspect the outcome would have been different if Marmarinos had been able to use an attorney. In this appeal, the panel never discussed the merits of his case; it found that because he hadn't stayed the ruling, it couldn't take any action that would help anyway. With a petitioner who is representing himself, this invites the question of whether he knew enough to ask for a stay, or had tried but been tripped up by some court rule or other practical problem a lawyer could solve. This is especially disappointing because Massachusetts state courts have shown some willingness to "unwind" wrongful foreclosure sales, a power the BAP said it didn't have. At Howard Law, P.C., the job of our Norwalk foreclosure defense attorneys includes helping clients understand their rights and obligations so they don't miss opportunities like this.
If you're considering bankruptcy because you're facing foreclosure and your bank isn't helping, don't wait to call Vincent Howard and the experienced attorneys at Howard Law. You can call us toll-free at 1-800-872-5925 or send us a message online.