First Circuit: Does a Local Government Have Authority To Regulate Foreclosures?

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IMLA Appellate Practice Blog - November 2013.

Many cities have struggled with the effects of foreclosures.

But given the complex mix of state laws that often governs the issue, how much authority do local governments have in this area?

A First Circuit case, Easthampton Savings Bank v. City of Springfield, No. 12-1917 (Nov. 22, 2013) addresses that question.

Six banks sued the City of Springfield, Massachusetts, after it had adopted two foreclosure ordinances. The ordinances require:

  1. banks to maintain property during the foreclosure process and to provide a $10,000 cash bond to the City; and
  2. banks and homeowners to engage in a mediation prior to foreclosure.

The banks claimed that the City’s requirements violated the Contracts Clause of the federal constitution and various provisions of Massachusetts law. Although the district court had entered judgment for the City, the First Circuit ruled on Friday that it was not yet prepared to do the same — at least not until the Massachusetts Supreme Judicial Court had the chance to weigh in. The First Circuit therefore certified the dispositive state-law questions to that court.

* This blog post was originally published in IMLA Appellate Practice Blog, November 25, 2013. Republished with permission. Visit www.imla.org/blog to read additional IMLA Appellate Practice Blog posts and to subscribe by email.

Topics:  Banks, Contracts Clause, Foreclosure, Local Ordinance, Mediation, Municipalities, State and Local Government

Published In: Civil Procedure Updates, Constitutional Law Updates, Finance & Banking Updates, Residential Real Estate Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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