Massachusetts Supreme Judicial Court Rejects Municipal Foreclosure Ordinances

On January 14, K&L Gates LLP published a Financial Institutions and Services Litigation Alert discussing recently contested Massachusetts municipal foreclosure ordinances.

Massachusetts Supreme Judicial Court Rejects Municipal Foreclosure Ordinances

Can a Massachusetts municipality impose ordinances on banks that are more onerous than existing statewide law?  In a recent landmark decision, the Massachusetts Supreme Judicial Court (“SJC”) answered “no.”  In Easthampton Savings Bank v. City of Springfield,[1] the SJC held that two ordinances, through which the City of Springfield (“Springfield”) sought to make foreclosures more difficult, were preempted by the Massachusetts Constitution.  The Easthampton Savings Bank decision should serve to curtail municipalities’ attempts to impose regulations that are more stringent than those imposed by statewide law and—in welcome news to banks and investors—restore a degree of consistency in conducting foreclosures in Massachusetts.

I. Springfield’s Foreclosure-Related Ordinances

In 2011, Springfield enacted two ordinances that purported to govern residential foreclosures within the city limits.[2]  The first ordinance (the “Mediation Ordinance”)[3] required mortgagees to participate in a city-run mediation program with mortgagors before undertaking a foreclosure sale.[4]  In particular, the Mediation Ordinance directed the parties to “renegotiate the terms of the loan in an effort to avoid foreclosure,”[5] and it precluded any residential foreclosure unless Springfield’s mediation program manager (1) determined that the parties were unable to renegotiate the terms after a good faith effort; and (2) issued a certificate of compliance authorizing the mortgagee to proceed with a foreclosure.[6]  The Mediation Ordinance also allowed for the imposition of a $300 per day fine for “non-compliance.”[7]

The second ordinance (the “Registration Ordinance”)[8] required “owners” to register and maintain vacant or “foreclosing” properties.[9]  The Registration Ordinance defined “owner” broadly to include mortgagees or trustees of securitized trusts that have “initiated the foreclosure process.”[10]  Under the Registration Ordinance (and contrary to settled Massachusetts law), the “initiation of the foreclosure process” included the filing of a complaint in Massachusetts Land Court under the Service Members Civil Relief Act (“SCRA”) or instances “where the mortgage authorizes mortgagee entry to make repairs upon mortgagor’s failure to do so.”[11]  The Registration Ordinance required an “owner” to post a $10,000 cash bond, remove hazardous waste, secure the property, and take other protective and maintenance measures with respect to the property within 30 days of the property becoming vacant or within 15 days of the “initiation of the foreclosure process.”[12]  The Registration Ordinance further required an “owner” to obtain a certificate of compliance (separate from the Mediation Ordinance certificate) or face potential fines in the amount of $300 per day.[13]

II. The SJC Strikes Down the Ordinances as Preempted by State Law

In December 2011, several banks filed suit in Massachusetts state court seeking to overturn the Springfield ordinances.[14]  Springfield removed the case to federal district court, which granted Springfield’s motion for summary judgment.  On appeal, the First Circuit certified the following two questions of unresolved state law to the SJC:

  1. Are the ordinances preempted, in whole or in part, by Massachusetts law? 
  2. Does the Foreclosure Ordinance impose an unlawful tax in violation of the Constitution of the Commonwealth of Massachusetts?[15]

The SJC accepted the certified questions, and, on December 19, 2014, it ruled that Springfield had exceeded its authority by enacting the ordinances.

First, the SJC held that the Massachusetts foreclosure statute (“Chapter 244”) preempts the Mediation Ordinance, because “the foreclosure process is wholly a matter of State regulation absent an expression of a clear intent to allow local regulation.”[16]  Moreover, the SJC observed that the legislature’s recent amendment of the foreclosure statute, which requires mortgagees to perform a loan modification analysis on certain loans, indicates a “legislative intent to occupy the field to the exclusion of other options—including further regulation at the local level.”[17]

Applying these principles to the Mediation Ordinance, the SJC ruled that Springfield’s mediation program conflicts with Chapter 244’s provision for the possibility of pre-foreclosure negotiation.[18]  That is, Section 35A of Chapter 244 provides mortgagors with 150 days to cure a payment default before the mortgagee can accelerate the note and commence foreclosure proceedings.[19]  A mortgagee, however, can reduce the 150-day waiting period to 90 days if it “engage[s] in a good faith effort to negotiate a commercially reasonable alternative to foreclosure” that “involve[s] at least one meeting, either in person or by telephone,” between the parties.[20]  In comparing Section 35A with Springfield’s Mediation Ordinance, the SJC found that “[t]he Legislature’s decision to utilize the proverbial ‘carrot’ of a shorter right-to-cure period trumps the city’s choice of the ‘stick’ of a daily fine.  Furthermore, the ordinance by its own terms does not allow a mortgagee to proceed with foreclosure before obtaining a certificate of good faith mediation, a direct impingement on the process of foreclosure.”[21] 

Second, the Court held that the Registration Ordinance is preempted by the Massachusetts Oil and Hazardous Material Release Prevention Act (“OHMRPA”), a statute designed “to compel the prompt and efficient cleanup of hazardous material and to ensure that costs and damages are borne by the appropriate responsible parties.”[22]  The SJC agreed with the plaintiff banks that the Registration Ordinance’s definition of “owner” was impermissibly broader than the OHMRPA’s definition of that term, and thus, the Ordinance was “squarely in conflict with a clearly stated legislative policy” regarding the liability of secured lenders.[23]  The Court noted that OHMRPA offers a safe harbor where a secured lender will “not be deemed an owner or operator with respect to the site securing the loan” under certain conditions, including for “releases and threats of release [of hazardous materials] that first begin to occur before such secured lender acquires ownership or possession of the site.”[24]  Thus, the plaintiff banks argued, the Registration Ordinance undermined OHMRPA’s safe harbor by exposing secured lenders to liability for a release or threat of release of hazardous materials that began prior to the lender’s possession.[25]  The SJC agreed and held that the Registration Ordinance was inconsistent with the statutory scheme because it required “mortgagees not yet in possession to enter the property and assume possession,” and therefore, it was preempted by OHMRPA.[26]

The SJC further held that Massachusetts’ State Sanitary Code (the “Sanitary Code”),[27] which regulates “minimum health and safety standards for residential premises,” also preempted the Registration Ordinance.  The Sanitary Code authorizes local boards of health and the State Department of Public Health to enforce the Sanitary Code by requesting that a court, among other remedies, appoint a receiver to remediate ongoing code violations.[28]  While Sanitary Code regulations permit enforcement authorities to enter properties to clean and repair them (under certain conditions) and charge the responsible person for incurred expenses, only receivers are required to post a bond and, even then, only after court appointment.[29]  Springfield’s Registration Ordinance, however, required an owner to post a bond up front that Springfield could draw on to cover incurred expenses.[30]  Because the Registration Ordinance required the posting of a bond where the Sanitary Code does not, the SJC found that the ordinance was preempted as it “place[d] a heavier burden on any owner than does the code to ensure enforcement of essentially the same mandates.”[31]

Finally, even though it had already found that Massachusetts law preempted the Registration Ordinance, the SJC also addressed the plaintiff banks’ argument that the $10,000 bond requirement was an unlawful tax.  The Court held that the bond requirement was not a tax, but rather a lawful fee.[32]

III. Restoring Consistency to Lenders’ Foreclosure Obligations

The decision in Easthampton Savings Bank should curtail municipalities’ attempts to impose local foreclosure ordinances that are plainly inconsistent with statewide law.  Moreover, Massachusetts cities that have already enacted local foreclosure ordinances may face similar challenges to that faced by Springfield.  For instance:

  • The City of Lawrence passed an ordinance requiring “owners”—which is broadly defined to include mortgagees in possession and trustees of securitized trusts who have initiated the foreclosure process—to register and maintain vacant or foreclosing properties.[33]
  • The cities of Worcester and Lynn passed ordinances that largely track the two Springfield ordinances that the SJC has now struck down, including ordinances (1) establishing a mandatory mediation program that is a prerequisite for proceeding with foreclosure;[34] and (2) mandating registration and maintenance of vacant or foreclosing properties, as well as the posting of a cash bond for each property, upon which the cities can draw down to satisfy unreimbursed expenses incurred while inspecting, maintaining, and securing properties.[35]

Time will tell if those ordinances stand up to scrutiny in light of the Easthampton Savings Bank decision.  In the meantime, Massachusetts has taken a step forward in removing inconsistent barriers to foreclosure within the Commonwealth.

*           *           *

1] Easthampton Savings Bank v. City of Springfield, No. SJC-11612, slip op. (Mass. Dec. 19, 2014). 

[2] Id. at 3.  In the Easthampton Savings Bank decision, the SJC cites to the ordinances under the prior version of Springfield’s municipal code of 1986, but Springfield amended its municipal code in 2011.  For ease of reference, citations in this alert are made to Springfield’s revised 2011 code, which is available at

[3] Springfield, MA, Rev. Ordinances of 2011, Art. I, Ch. 182, et seq.

[4] Id. at 4; Mediation Ordinance, § 182-3

[5] Id., § 182-8(F). 

[6] Id.

[7] Id., § 182-10.

[8] Springfield, MA, Rev. Ordinances of 2011, Art. II, Ch. 285, et seq.

[9] Easthampton Savs. Bank, slip op. at 5; Registration Ordinance, § 285-10.

[10] Registration Ordinance, § 285-9.

[11] Id. Contrary to the definition of “initiation of the foreclosure process” in the Mediation Ordinance, the SJC has long held that the “foreclosure process” is initiated with publication of the notice of sale, and that the SCRA proceeding and the sending of the notice of right to cure under Section 35A are “pre-foreclosure” undertakings, which are unrelated to foreclosure.  See, e.g., U.S. Bank N.A. v. Schumacher, 467 Mass. 421, 431, 5 N.E.3d 882, 890 (2014) (holding Section 35A notice is merely a “preforeclosure undertaking”); HSBC Bank USA, N.A. v. Matt, 464 Mass. 193, 197, 981 N.E.2d 710, 715 (2013) (holding a SCRA “proceeding is neither a part of nor necessary to the foreclosure process”); Beaton v. Land Court, 367 Mass. 385, 390, 326 N.E.2d 302, 305 (1975) (holding SCRA proceedings “occur independently of the actual foreclosure itself and of any judicial proceedings determinative of the general validity of the foreclosure”).

[12] Registration Ordinance, § 285-10(A).

[13] Id., § 285-17.

[14] Easthampton Savs. Bank, slip op. at 3. 

[15] Id. at 2.

[16] Id. at 12.

[17] Id. at 13 (citing Mass. Gen. Laws ch. 244, § 35B(b)). 

[18] Id. at 11. 

[19] Id. at 10; Mass. Gen. Laws ch. 244, § 35A(b). 

[20] Mass. Gen. Laws ch. 244, § 35A(b). 

[21] Easthampton Savs. Bank, slip op. at 12 (emphasis added). 

[22] Id. at 15 (quoting Taygeta Corp. v. Varian Assocs., 436 Mass. 217, 223 (2002)).  The SJC held that Chapter 244 did not preempt the Registration Ordinance because that ordinance did not impact the statutory “procedures by which the equity of redemption in a mortgage may be foreclosed.”  Id. at 13.

[23] Id.

[24] Mass. Gen. Laws ch. 21E, § 2(c); Easthampton Savs. Bank, slip op. at 15.

[25] Easthampton Savs. Bank, slip op. at 16. 

[26]  Id. at 17.  The SJC also rejected Springfield’s argument that the Registration Ordinance was not preempted because it expressly excluded owners “exempt from such action by Massachusetts General Laws,” because Massachusetts’ “comprehensive” statutory scheme “wholly occupied” the field, and, thus, because Springfield “has no regulatory power,” irrespective of any exemptions.

[27] 105 CMR § 410, et seq.

[28] Id. at 19; Mass. Gen. Laws ch. 111, § 127I; 105 CMR § 410.960(A).

[29] Easthampton Savs. Bank, slip op. at 20; Mass. Gen. Laws ch. 111, § 127I. 

[30] Registration Ordinance, § 285-10(A)(11).

[31] Easthampton Savs. Bank, slip op. at 20.

[32] Id. at 21-27.

[33] See Lawrence, Mass., Code ch. 8.28 §§ 8.28.010 et seq. (2008).

[34] Worcester, MA., Rev. Ordinances, ch. 9, § 14A (2013); Lynn, MA, Ordinance Amending the Ordinance to Establish a Bill of Rights for Homeowners in the City of Lynn, §§ 3.00-11.00. (Mar. 4, 2014) (“Lynn Ordinance”).

[35] Worcester, MA., Rev. Ordinances, ch. 9, § 14 (2013); Lynn Ordinance, § 13.00.

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David D. Christensen
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About Safeguard 
Safeguard Properties is the mortgage field services industry leader, preserving vacant and foreclosed properties across the U.S., Puerto Rico, Virgin Islands and Guam. Founded in 1990 by Robert Klein and headquartered in Cleveland, Ohio, Safeguard provides the highest quality service to our clients by leveraging innovative technologies and proactively developing industry best practices and quality control procedures. Consistent with Safeguard’s values and mission, we are an active supporter of hundreds of charitable efforts across the country. Annually, Safeguard gives back to communities in partnership with our employees, vendors and clients. We also are dedicated to working with community leaders and officials to eliminate blight and stabilize neighborhoods. Safeguard is dedicated to preserving today and protecting tomorrow.  Website:



Alan Jaffa

Alan Jaffa is the chief executive officer for Safeguard, steering the company as the mortgage field services industry leader. He also serves on the board of advisors for SCG Partners, a middle-market private equity fund focused on diversifying and expanding Safeguard Properties’ business model into complimentary markets.

Alan joined Safeguard in 1995, learning the business from the ground up. He was promoted to chief operating officer in 2002, and was named CEO in May 2010. His hands-on experience has given him unique insights as a leader to innovate, improve and strengthen Safeguard’s processes to assure that the company adheres to the highest standards of quality and customer service.

Under Alan’s leadership, Safeguard has grown significantly with strategies that have included new and expanded services, technology investments that deliver higher quality and greater efficiency to clients, and strategic acquisitions. He takes a team approach to process improvement, involving staff at all levels of the organization to address issues, brainstorm solutions, and identify new and better ways to serve clients.

In 2008, Alan was recognized by Crain’s Cleveland Business in its annual “40-Under-40” profile of young leaders. He also was named a NEO Ernst & Young Entrepreneur of the Year® finalist in 2013.


Chief Operating Officer

Michael Greenbaum

Michael Greenbaum is the chief operating officer for Safeguard. Mike has been instrumental in aligning operations to become more efficient, effective, and compliant with our ever-changing industry requirements. Mike has a proven track record of excellence, partnership and collaboration at Safeguard. Under Mike’s leadership, all operational departments of Safeguard have reviewed, updated and enhanced their business processes to maximize efficiency and improve quality control.

Mike joined Safeguard in July 2010 as vice president of REO and has continued to take on additional duties and responsibilities within the organization, including the role of vice president of operations in 2013 and then COO in 2015.

Mike built his business career in supply-chain management, operations, finance and marketing. He has held senior management and executive positions with Erico, a manufacturing company in Solon, Ohio; Accel, Inc., a packaging company in Lewis Center, Ohio; and McMaster-Carr, an industrial supply company in Aurora, Ohio.

Before entering the business world, Mike served in the U.S. Army, Ordinance Branch, and specialized in supply chain management. He is a distinguished graduate of West Point (U.S. Military Academy), where he majored in quantitative economics.



Sean Reddington

Sean Reddington is the new Chief Information Officer for Safeguard Properties LLC. Sean has over 15+ years of experience in Information Services Management with a strong focus on Product and Application Management. Sean is responsible for Safeguard’s technological direction, including planning, implementation and maintaining all operational systems

Sean has a proven record of accomplishment for increasing operational efficiencies, improving customer service levels, and implementing and maintaining IT initiatives to support successful business processes.  He has provided the vision and dedicated leadership for key technologies for Fortune 100 companies, and nationally recognized consulting firms including enterprise system architecture, security, desktop and database management systems. Sean possesses strong functional and system knowledge of information security, systems and software, contracts management, budgeting, human resources and legal and related regulatory compliance.

Sean joined Safeguard Properties LLC from RenPSG Inc. which is a nationally leading Philintropic Software Platform in the Fintech space. He oversaw the organization’s technological direction including planning, implementing and maintaining the best practices that align with all corporate functions. He also provided day-to-day technology operations, enterprise security, information risk and vulnerability management, audit and compliance, security awareness and training.

Prior to RenPSG, Sean worked for DMI Consulting as a Client Success Director where he guided the delivery in a multibillion-dollar Fortune 500 enterprise client account. He was responsible for all project deliveries in terms of quality, budget and timeliness and led the team to coordinate development and definition of project scope and limitations. Sean also worked for KPMG Consulting in their Microsoft Practice and Technicolor’s Ebusiness Division where he had responsibility for application development, maintenance, and support.

Sean is a graduate of Rutgers University with a Bachelor of Arts and received his Masters in International Business from Central Michigan University. He was also a commissioned officer in the United States Air Force prior to his career in the business world.


General Counsel and Executive Vice President

Linda Erkkila, Esq.

Linda Erkkila is the general counsel and executive vice president for Safeguard and oversees the legal, human resources, training, and compliance departments. Linda’s responsibilities cover regulatory issues that impact Safeguard’s operations, risk mitigation, enterprise strategic planning, human resources and training initiatives, compliance, litigation and claims management, and mergers, acquisition and joint ventures.

Linda assures that Safeguard’s strategic initiatives align with its resources, leverage opportunities across the company, and contemplate compliance mandates. Her practice spans over 20 years, and Linda’s experience covers regulatory disclosure, corporate governance compliance, risk assessment, executive compensation, litigation management, and merger and acquisition activity. Her experience at a former Fortune 500 financial institution during the subprime crisis helped develop Linda’s pro-active approach to change management during periods of heightened regulatory scrutiny.

Linda previously served as vice president and attorney for National City Corporation, as securities and corporate governance counsel for Agilysys Inc., and as an associate at Thompson Hine LLP. She earned her JD at Cleveland-Marshall College of Law. Linda holds a degree in economics from Miami University and an MBA. In 2017, Linda was named as both a “Woman of Influence” by HousingWire and as a “Leading Lady” by MReport.


Chief Financial Officer

Joe Iafigliola

Joe Iafigliola is the Chief Financial Officer for Safeguard. Joe is responsible for the Control, Quality Assurance, Business Development, Accounting & Information Security departments, and is a Managing Director of SCG Partners, a middle-market private equity fund focused on diversifying and expanding Safeguard Properties’ business model into complimentary markets.

Joe has been in a wide variety of roles in finance, supply chain management, information systems development, and sales and marketing. His career includes senior positions with McMaster-Carr Supply Company, Newell/Rubbermaid, and Procter and Gamble.

Joe has an MBA from The Weatherhead School of Management at Case Western Reserve University, is a Certified Management Accountant (CMA), and holds a bachelor’s degree from The Ohio State University’s Honors Accounting program.


AVP, High Risk and Investor Compliance

Steve Meyer

Steve Meyer is the assistant vice president of high risk and investor compliance for Safeguard. In this role, Steve is responsible for managing our clients’ conveyance processes, Safeguard’s investor compliance team and developing our working relationships with cities and municipalities around the country. He also works directly with our clients in our many outreach efforts and he represents Safeguard at a number of industry conferences each year.

Steve joined Safeguard in 1998 as manager over the hazard claims team. He was instrumental in the development and creation of policies, procedures and operating protocol. Under Steve’s leadership, the department became one of the largest within Safeguard. In 2002, he assumed responsibility for the newly-formed high risk department, once again building its success. Steve was promoted to director over these two areas in 2007, and he was promoted to assistant vice president in 2012.

Prior to joining Safeguard, Steve spent 10 years within the insurance industry, holding a number of positions including multi-line property adjuster, branch claims supervisor, and multi-line and subrogation/litigation supervisor. Steve is a graduate of Grove City College.


AVP, Operations

Jennifer Jozity

Jennifer Jozity is the assistant vice president of operations, overseeing inspections, REO and property preservation for Safeguard. Jen ensures quality work is performed in the field and internally, to meet and exceed our clients’ expectations. Jen has demonstrated the ability to deliver consistent results in order audit and order management.  She will build upon these strengths in order to deliver this level of excellence in both REO and property preservation operations.

Jen joined Safeguard in 1997 and was promoted to director of inspections operations in 2009 and assistant vice president of inspections operations in 2012.

She graduated from Cleveland State University with a degree in business.


AVP, Finance

Jennifer Anspach

Jennifer Anspach is the assistant vice president of finance for Safeguard. She is responsible for the company’s national workforce of approximately 1,000 employees. She manages recruitment strategies, employee relations, training, personnel policies, retention, payroll and benefits programs. Additionally, Jennifer has oversight of the accounts receivable and loss functions formerly within the accounting department.

Jennifer joined the company in April 2009 as a manager of accounting and finance and a year later was promoted to director. She was named AVP of human capital in 2014. Prior to joining Safeguard, she held several management positions at OfficeMax and InkStop in both operations and finance.

Jennifer is a graduate of Youngstown State University. She was named a Crain’s Cleveland Business Archer Award finalist for HR Executive of the Year in 2017.


AVP, Application Architecture

Rick Moran

Rick Moran is the assistant vice president of application architecture for Safeguard. Rick is responsible for evolving the Safeguard IT systems. He leads the design of Safeguard’s enterprise application architecture. This includes Safeguard’s real-time integration with other systems, vendors and clients; the future upgrade roadmap for systems; and standards designed to meet availability, security, performance and goals.

Rick has been with Safeguard since 2011. During that time, he has led the system upgrades necessary to support Safeguard’s growth. In addition, Rick’s team has designed and implemented several innovative systems.

Prior to joining Safeguard, Rick was director of enterprise architecture at Revol Wireless, a privately held CDMA Wireless provider in Ohio and Indiana, and operated his own consulting firm providing services to the manufacturing, telecommunications, and energy sectors.


AVP, Technology Infrastructure and Cloud Services

Steve Machovina

Steve Machovina is the assistant vice president of technology infrastructure and cloud services for Safeguard. He is responsible for the overall management and design of Safeguard’s hybrid cloud infrastructure. He manages all technology engineering staff who support data centers, telecommunications, network, servers, storage, service monitoring, and disaster recovery.

Steve joined Safeguard in November 2013 as director of information technology operations.

Prior to joining Safeguard, Steve was vice president of information technology at Revol Wireless, a privately held wireless provider in Ohio and Indiana. He also held management positions with Northcoast PCS and Corecomm Communications, and spent nine years as a Coast Guard officer and pilot.

Steve holds a BBA in management information systems from Kent State University in Ohio and an MBA from Wayne State University in Michigan.


Assistant Vice president of Application Development

Steve Goberish

Steve Goberish, is the assistant vice president of application development for Safeguard. He is responsible for the maintenance and evolution of Safeguard’s vendor systems ensuring high-availability, security and scalability while advancing the vendor products’ capabilities and enhancing the vendor experience.

Prior to joining Safeguard, Steve was a senior technical architect and development manager at First American Title Insurance, a publicly held title insurance provider based in southern California, in addition to managing and developing applications in multiple sectors from insurance to VOIP.

Steve has a bachelor’s degree from Kent State University in Ohio.