The Massachusetts Supreme Judicial Court recently issued an opinion in an eviction (a.k.a. Summary Process) matter that is likely to result in increased challenges by former mortgagors against parties that acquire properties by foreclosure. In Bank of New York v. Bailey, 460 Mass. 327 (2011), the Supreme Judicial Court clarified that in post-foreclosure actions for possession, the Housing Courts have the authority to hear claims and defenses of former mortgagors that the foreclosure is invalid. The Court also clarified what plaintiffs in post-foreclosure eviction actions must show in the complaint seeking possession.

While the Bailey decision details the historical context of evictions actions to illustrate that the Housing Courts have always had subject matter jurisdiction over defenses and claims concerning the underlying foreclosure, prior to Bailey, many Housing Courts routinely dismissed defenses and counterclaims of former mortgagors that were premised on the legality of a foreclosure sale for lack of subject matter jurisdiction. Typically, wrongful foreclosure claims brought in an eviction action by former mortgagors were stayed or consolidated with a corresponding Superior Court case filed by the former mortgagor challenging the foreclosure. As a result of the Bailey case, it is expected that Housing Courts will substantially change their practices and now entertain claims and defenses in eviction actions that relate to wrongful foreclosure.