March 25, 2021
Supreme Court
No. 2019-241-Appeal.
(PC 16-1233)
Ocwen Loan Servicing, LLC :
v. :
Ana Medina et al. :
NOTICE: This opinion is subject to formal revision
before publication in the Rhode Island Reporter. Readers
are requested to notify the Opinion Analyst, Supreme
Court of Rhode Island, 250 Benefit Street, Providence,
Rhode Island 02903, at Telephone 222-3258 or Email
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before the opinion is published.
Supreme Court
No. 2019-241-Appeal.
(PC 16-1233)
Ocwen Loan Servicing, LLC :
v. :
Ana Medina et al. :
Present: Suttell, C.J., Goldberg, Robinson, Lynch Prata, and Long, JJ.
OPINION
Justice Long, for the Court. The defendant, Ana Medina (Ms. Medina or
defendant), appeals from an order of the Superior Court confirming the judicial
foreclosure sale of her home in favor of the plaintiff, Ocwen Loan Servicing, LLC
(Ocwen or plaintiff). This case came before the Supreme Court pursuant to an order
directing the parties to appear and show cause why the issues raised in this appeal
should not be summarily decided. After considering the parties’ written and oral
submissions, and after reviewing the record, we conclude that cause has not been
shown and that this case may be decided without further briefing or argument. For
the reasons set forth in this opinion, we affirm the order of the Superior Court.
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Facts and Travel
Ms. Medina was the record owner of real property located at 100 Daboll Street
in Providence (the property). In 2006 Ms. Medina delivered a note to Homecomings
Financial Network, Inc., in the principal amount of $268,000 and, as security for the
note, executed a first mortgage in the same amount to Mortgage Electronic
Registration Systems, Inc., as nominee for Homecomings. The mortgage contained
a power of sale provision in the event of default.1 Unfortunately, Ms. Medina ceased
making payments on the note in 2009 and thus defaulted on the note.
Federal Home Loan Mortgage Corporation (Freddie Mac) became holder of
both the note and mortgage after a series of assignments and commenced this action
in the Superior Court on March 18, 2016. Freddie Mac alleged that Ms. Medina
had defaulted on the note and owed the sum of $460,867.10 as of January 29, 2016.2
1
Paragraph 22 of the mortgage provides, in relevant part:
“If the default is not cured * * * Lender * * * may invoke
the STATUTORY POWER OF SALE and any other
remedies permitted by Applicable Law. * * *
“If Lender invokes the STATUTORY POWER OF SALE,
Lender shall mail a copy of a notice of sale to Borrower[.]
* * * Lender shall publish the notice of sale, and the
Property shall be sold in the manner prescribed by
applicable law.”
2
The verified complaint also names City of Providence Department of Inspection
and Standards; Urologic Specialist of New England LLC; Mortgage Electronic
Registration Systems, Inc.; and Homecomings Financial Network, Inc., as
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Freddie Mac further alleged that it was entitled to foreclose the mortgage to satisfy
defendant’s obligations under the note and mortgage and, in its prayer for relief,
requested that “an interlocutory decree enter authorizing the Plaintiff to foreclose
the Mortgage * * * by the exercise of power of sale therein and in accordance with
R.I.G.L. § 34-27-1, et seq.”3 A constable served a summons and the verified
complaint at the property on March 25, 2016, and Ms. Medina, through counsel,
filed an answer on April 8, 2016.
Freddie Mac filed a motion for partial summary judgment on August 29, 2017,
again seeking entry of an interlocutory decree as specified in the verified complaint.
Freddie Mac asserted that it was entitled to conduct a private foreclosure sale
pursuant to the statutory power of sale contained in the mortgage instrument, but
that it nevertheless pursued this action because judicial oversight of all aspects of
the foreclosure would allow adjudication of any defenses raised and thus promote
judicial economy. The defendant filed a written objection to the motion, arguing, in
part, that the relief sought was not consistent with G.L. 1956 § 34-27-1. However,
defendant later withdrew that objection.
defendants, and alleges that those defendants purportedly hold recorded liens against
the property.
3
General Laws 1956 § 34-27-1, the judicial foreclosure statute, provides that “[a]ny
person entitled to foreclose the equity of redemption in any mortgaged estate,
whether real or personal, may prefer a complaint to foreclose it, which complaint
may be heard, tried, and determined according to the usages in chancery and the
principles of equity.”
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The trial justice granted Freddie Mac’s unopposed motion by order dated
January 29, 2018, and thereby authorized foreclosure “by the exercise of power of
sale therein and in accordance with R.I.G.L. § 34-27-1, et seq., subject to
confirmation by this [c]ourt.” The order also required Freddie Mac to provide notice
and conduct the sale of the property in accordance with G.L. 1956 § 34-11-22 and
§ 34-27-4; 4 however, the order prohibited Freddie Mac from sending notice until
after it issued a final decision regarding Ms. Medina’s recently submitted loss-
mitigation application.
On June 11, 2018, Freddie Mac assigned its interest in the mortgage to Ocwen.
Freddie Mac thereafter moved to substitute Ocwen as plaintiff, stating that Freddie
Mac had transferred its interest in the note and mortgage to Ocwen. Ms. Medina did
not oppose that motion, and the court issued an order granting the substitution on
September 4, 2018.
On September 12, 2018, Ocwen mailed a certified letter (the certified letter)
to Ms. Medina notifying her, “in accordance with the statute,” that Ocwen intended
to hold a foreclosure sale on or after November 5, 2018, “under power of sale for
breach of condition * * *.” Ocwen subsequently published notice of the impending
4
General Laws 1956 § 34-11-22 sets forth the statutory power of sale that “may be
incorporated in any mortgage by reference[.]” Section 34-27-4 identifies the notice
and publication requirements for foreclosures conducted pursuant to the statutory
power of sale.
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sale in The Providence Journal on October 15, 22, and 29, 2018. The published
notice stated that the Property “will be sold * * * by virtue of the power of sale
contained in a mortgage by Ana Medina[.]”
On December 14, 2018, Ocwen filed a motion to confirm the judicial
foreclosure sale, wherein it stated that it had conducted the sale in accordance with
the provisions of §§ 34-11-22 and 34-27-4. Ms. Medina objected to the motion on
two principal grounds, alleging that (1) she did not receive a notice advising her of
the availability of mortgage counseling services at least forty-five days prior to
receiving the certified letter, in contravention of § 34-27-3.1; and (2) Ocwen had no
authority to foreclose, because it owned neither the note nor the mortgage at the time
of foreclosure.
Ocwen countered at the hearing on the motion to confirm that defendant’s
notice argument was without merit, because the matter before the court was a
judicial, rather than a statutory, foreclosure. Ocwen explained that it had complied
with the requirements set forth in § 34-27-4 as a matter of practice, because such
compliance safeguards a borrower’s constitutional rights. The trial justice granted
Ocwen’s motion and entered an order that provides, inter alia, “[t]he judicial
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foreclosure sale is confirmed[.]” The defendant subsequently appealed from that
order. 5
Although no final judgment has entered, the order confirming judicial
foreclosure is an interlocutory order concerning the sale of real property. Thus, this
Court has jurisdiction pursuant to G.L. 1956 § 9-24-7, which provides: “Whenever,
upon a hearing in the [S]uperior [C]ourt, * * * a sale of real or personal property
[shall be] ordered, by an interlocutory order or judgment * * * an appeal may be
taken from such order or judgment to the [S]upreme [C]ourt in like manner as from
a final judgment[.]” On appeal, Ms. Medina argues that the trial justice committed
error by confirming the foreclosure sale because, she alleges (1) she had not been
provided a copy of a § 34-27-3.1 notice of foreclosure counseling at least forty-five
days prior to receiving the certified letter; and (2) plaintiff foreclosed the property
without holding either the note or the mortgage. We shall address these issues in
turn.
Applicability of § 34-27-3.1
The defendant first argues that the trial justice committed error in confirming
the foreclosure sale because plaintiff failed to comply with § 34-27-3.1. More
specifically, Ms. Medina contends that Ocwen should have provided notice of
5
Of the several defendants named in this action, only Ana Medina appealed from
the order confirming foreclosure.
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foreclosure counseling at least forty-five days prior to mailing the certified letter
announcing the November 5, 2018 foreclosure sale. She argues that the action before
the Superior Court was not a judicial foreclosure action, but rather a declaratory
judgment action to exercise the statutory power of sale contained within the
mortgage. In support of this, defendant points to various references to foreclosure
under the statutory power of sale, not only in the certified letter and in the notice
published in The Providence Journal, but also in the January 29, 2018 order granting
partial summary judgment. In response, Ocwen contends that § 34-27-3.1 is
inapplicable because that statute governs nonjudicial foreclosures initiated pursuant
to § 34-27-4; according to plaintiff, Freddie Mac initiated a judicial foreclosure
pursuant to § 34-27-1. Ocwen claims that it proposed use of procedures outlined in
§§ 34-11-22 and 34-27-4 to promote judicial economy rather than “inventing unique
procedures[.]”
Section 34-27-3.1, which was repealed by P.L. 2014, ch. 543, § 2, required
mortgagees to advise mortgagors of the availability of mortgage counseling services
through HUD-approved mortgage counseling agencies prior to initiating a
nonjudicial foreclosure sale in accordance with § 34-27-4(b).6 Accordingly, it
6
Section 34-27-3.1 was enacted in 2009. It provided, in relevant part, as follows:
“(a) No less than forty-five (45) days prior to initiating any
foreclosure of real estate pursuant to subsection
34-27-4(b), the mortgagee shall provide to an individual
consumer mortgagor written notice of default * * *[.]
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follows that defendant’s reliance on § 34-27-3.1 has no relevance unless plaintiff
sought to foreclose on the property under the statutory power of sale.
At the outset, we observe that the foreclosure in this action was initiated upon
the filing of a verified complaint in the Superior Court. Freddie Mac alleged default
in the performance of the terms and conditions of a note and mortgage and sought
entry of an interlocutory decree “authorizing the Plaintiff to foreclose the Mortgage
* * * by the exercise of power of sale therein and in accordance with R.I.G.L. § 34-
27-1, et seq.” (Emphasis added.) A constable served the summons and verified
complaint at the property; Ms. Medina not only filed an answer through counsel, but
also challenged the propriety of proceeding under § 34-27-1—before withdrawing
such challenge and all objections to partial summary judgment.
It is our opinion that Freddie Mac initiated a judicial foreclosure action in the
verified complaint that it filed on March 18, 2016. Any reference to the statutory
power of sale in the certified letter, or in the notice published in The Providence
Journal, does not change the nature of the proceeding before the Superior Court. As
(b) The written notice required by this section * * * shall
advise the mortgagor of the availability of counseling
through HUD-approved mortgage counseling agencies
* * *[.]”
Public Laws 2014, ch. 543, § 2 repealed § 34-27-3.1, amended § 34-27-3.2, and
included a sunset provision with expiration on July 1, 2018. The thrust of
defendant’s argument is founded on her contention that § 34-27-3.1 had been revived
upon the expiration of P.L. 2014, ch. 543, § 2 on July 1, 2018.
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was argued persuasively prior to the granting of partial summary judgment, upon
initiation of judicial foreclosure proceedings, the court first determines whether the
mortgagee is entitled to foreclose the mortgage. If foreclosure is appropriate, the
court then oversees the conduct and process of the foreclosure sale. In this action,
the trial justice prescribed the process for the judicial foreclosure sale through the
order dated January 29, 2018: the plaintiff would provide notice, and conduct the
sale, according to the procedure outlined in § 34-11-22. The order also prohibited
any certified mailing or publication of notice announcing the November 5, 2018 sale
until after Freddie Mac issued a final decision regarding Ms. Medina’s loss-
mitigation application. As such, when the motion to confirm the judicial foreclosure
sale was heard, the question before the trial justice was whether plaintiff had
conducted the sale in accordance with the order dated January 29, 2018.
The record does not demonstrate deviation from the process prescribed in the
order dated January 29, 2018; therefore, we discern no error in the decision of the
trial justice to confirm the judicial foreclosure sale.7
The Plaintiff’s Authority to Foreclose
The defendant also asserts that the foreclosure sale should not have been
confirmed because Ocwen foreclosed the property without holding either the note or
7
Because of our firm opinion, we need not, and do not, decide whether § 34-27-3.1
would be applicable had this been a declaratory judgment action to exercise the
statutory power of sale.
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the mortgage. Ocwen counters that it is immaterial that it did not hold the note at
the time of foreclosure, because it held the mortgage, and a mortgagee need not hold
the note to foreclose on a property.
The defendant’s assertion lacks merit. The record reveals that Freddie Mac
assigned the mortgage to Ocwen prior to the foreclosure sale.8 As this Court has
“repeatedly said in a long line of cases stemming from Bucci v. Lehman Brothers
Bank, FSB, 68 A.3d 1069 (R.I. 2013), a mortgagee need not hold the note in order
to foreclose on a property.” Pimentel v. Deutsche Bank National Trust Company,
174 A.3d 740, 745 (R.I. 2017).
Conclusion
For the reasons set forth in this opinion, we affirm the order of the Superior
Court and remand the papers in this case to the Superior Court.
8
As noted supra, the record also reveals that defendant did not oppose the motion
to substitute Ocwen as plaintiff after Freddie Mac assigned Ocwen its interest in the
mortgage on June 11, 2018.
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STATE OF RHODE ISLAND
SUPREME COURT – CLERK’S OFFICE
Licht Judicial Complex
250 Benefit Street
Providence, RI 02903
OPINION COVER SHEET
Title of Case Ocwen Loan Servicing, LLC v. Ana Medina et al.
No. 2019-241-Appeal.
Case Number
(PC 16-1233)
Date Opinion Filed March 25, 2021
Suttell, C.J., Goldberg, Robinson, Lynch Prata, and
Justices
Long, JJ.
Written By Associate Justice Melissa A. Long
Source of Appeal Providence County Superior Court
Judicial Officer from Lower Court Associate Justice Maureen B. Keough
For Plaintiff:
Jeffrey C. Ankrom, Esq.
Attorney(s) on Appeal Robert J. Durant, Esq.
For Defendant:
John B.Ennis, Esq.
SU-CMS-02A (revised June 2020)