A Connecticut Superior Court Judge recently decided that mortgage company can be made to answer for the sins of the original lender in a foreclosure action. Consumers now have a new tool in their fight against mortgage lender fraud.
Defenses to foreclosure actions in Connecticut traditionally have been severely limited. You had to allege payment, release of the mortgage, or an invalid lien. If there were any other claims, those defenses could not be presented in the foreclosure action, but instead needed to be litigated in a separate action against the original lender or not at all.
When the sale or assignment of mortgages became commonplace, the opportunity to present any defense to a foreclosure action in Connecticut became nearly non-existent. Not so in other states.
You could not hold anyone responsible for the fraud or misbehavior of the original lender in making the loan.
Massachusetts foreclosure procedure is wierd. It's a non-judicial state, which means that no court order is needed to foreclose and get legal title to the property. In other states which require a judicial proceeding, one can answer the complaint and stop the foreclosure cold while demanding...