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Sabato v. Federal National Mortgage Association

Supreme Court of New Hampshire

May 3, 2019

WAYNE SABATO
v.
FEDERAL NATIONAL MORTGAGE ASSOCIATION

          Argued: January 10, 2019

          Hillsborough-southern judicial district

          Smith-Weiss Shepard, P.C., of Nashua (Robert M. Shepard and Tanya L. Spony on the brief, and Mr. Shepard orally), for the plaintiff.

          Flagg Law, PLLC, of Portsmouth (Jonathan M. Flagg on the brief and orally), for the defendant.

          HICKS, J.

         The plaintiff, Wayne Sabato, appeals, and the defendant, Federal National Mortgage Association (FNMA), cross-appeals, orders of the Superior Court (Temple, J.) in this action brought by the plaintiff to establish his homestead right in the subject property. We affirm.

         The following facts were recited by the trial court in its orders. In 2001, the plaintiff's wife, Cheryl A. Sabato, acquired the subject property in Pelham (the property). She took title by a warranty deed that acknowledged she was a "married person," and granted a purchase money mortgage to a party not identified in the record (the original mortgage), which the plaintiff did not sign. Both Cheryl and the plaintiff have resided at the property since 2001.

         In January 2002, Cheryl refinanced the original mortgage, executing a new mortgage securing the amount of $173, 250 to HomeVest Mortgage Corporation (the first mortgage). The plaintiff did not sign the first mortgage, which was immediately assigned to CitiMortgage, Inc. The original mortgage was discharged approximately four months later and is not at issue in this appeal. All of the foregoing transactions were recorded in the registry of deeds.

         In 2005, Cheryl granted a mortgage to National City Bank to secure a home equity line of credit with a maximum principal amount of $65, 000 (the second mortgage). Both Cheryl and the plaintiff signed the second mortgage. National City Bank was acquired by PNC Bank National Association, which assigned the second mortgage to Situs Investments, LLC (Situs) in 2013. Meanwhile, in 2011, the first mortgage was assigned by CitiMortgage, Inc. to FNMA.

         In 2014, Situs foreclosed its mortgage, and purchased the property at the foreclosure auction for $64, 872.01, taking title subject to the first mortgage.[1]Situs then sold its interest in the property to FNMA. Accordingly, FNMA now holds title to the property as well as the first mortgage thereon.

         In 2016, FNMA notified the Sabatos that they might be evicted from the property. The plaintiff then filed the instant action seeking to establish his homestead right in the property. Both parties moved for summary judgment. The plaintiff contended that foreclosure of the second mortgage did not affect his homestead right because he had not waived that right in the first mortgage. FNMA argued that, because the plaintiff waived his homestead interest in the second mortgage, he could not now assert any homestead right.

         The court denied both motions, concluding that the summary judgment record was insufficient to decide the issues before it as a matter of law. Both parties moved for reconsideration, supplying additional evidence.

         Based upon the new evidence and concessions by FNMA at the motions hearing, the trial court denied FNMA's motion but granted the plaintiff's motion in part. The court concluded that "prior to the execution of the second mortgage, the plaintiff had an unencumbered homestead right." The court also concluded that, "[u]nder settled New Hampshire law, the plaintiff's signature was sufficient to waive his homestead right relative to the second mortgage." ...


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