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New Hampshire Supreme Court - Whether Separating Note From Mortgage Destroys "Unity" Needed to Foreclose

law.justia.com | November 21, 2014

Castagnaro v. Bank of New York Mellon

Court: U.S. Court of Appeals for the First Circuit 
Opinion Date: November 20, 2014
Areas of Law: Banking, Real Estate & Property Law

At issue in this case was whether New Hampshire law requires a foreclosing entity to hold both mortgage and note before it can exercise a power of sale under N.H. Rev. Stat. Ann. 479:25, which authorizes a mortgagee to conduct a non-judicial foreclosure where, as in this case, the mortgage document contains a clause allowing them. Plaintiff executed a promissory note and a mortgage. The note and mortgage document and the note were subsequently assigned to different entities. After Plaintiff failed to make mortgage payments, Defendant, the mortgagee, moved to foreclose. Defendant removed the case from New Hampshire state court to federal court. The district court allowed Defendant’s motion to dismiss, concluding that the parties’ intent to separate the mortgage and note at the beginning of the transaction trumped any common law rule requiring unity, and thus, Defendant could proceed with the foreclosure under section 479:25. Plaintiff appealed. Because controlling state precedent did not provide definitive guidance on how to resolve the questions of whether the common law or state statute mandates the unity of a mortgage and note, and if so, whether parties can override that rule by agreement, the First Circuit certified the questions to the New Hampshire Supreme Court.

View Case.

Nancy Duffy McCarron, CBN 164780
Attorney, Real Estate Broker, BBB Arbitrator, CA Notary Public
Certified Forensic Loan Auditor, Property Manager


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