NOTE: Mortgage Foreclosure & Bankruptcy in Massachusetts: Is a Lawful State Foreclosure a Fraudulent Federal Transfer? Skip over navigation
LexisNexis® Browse Law Reviews and Treatises
Skip over navigation
Sign in with your® ID to access the full text of this article.
Order the full text of this article if you do not have a® ID.
US $22.00 (+ tax)

Copyright (c) 1990 New England School of Law
New England Law Review

NOTE: Mortgage Foreclosure & Bankruptcy in Massachusetts: Is a Lawful State Foreclosure a Fraudulent Federal Transfer?

Fall, 1990

25 New Eng. L. Rev. 325


Robert E. Richards, Jr. *



The validity of mortgage foreclosures under state law is currently being challenged by federal bankruptcy trustees and foreclosed borrowers with increasing frequency in Massachusetts and across the United States. Occasionally, such challenges have succeeded, disrupting established state mortgage law and calling into question the finality of foreclosure sales. 1

Consider the following set of circumstances. A home owner, facing financial difficulty, defaults on a mortgage loan, and the lender begins foreclosure proceedings. The lender successfully forecloses and sells the property at public auction, in accordance with state law and the power of sale incorporated in the mortgage. 2 The property is sold for a price which represents the lender's outstanding mortgage interest, but which is only sixty-five percent of the property's appraised market value. A state court approves the foreclosure and endorses a foreclosure deed evidencing the sale of the property. At this point the lender and the purchaser of the property consider the transaction to be final.

Within one year of the foreclosure sale, however, the original home buyer files for protection under the federal Bankruptcy Code and the trustee in bankruptcy seeks to overturn the sale as a fraudulent transfer. 3 The trustee asserts that under federal law, where the price realized at the sale was not the "reasonably equivalent value" 4 of the property, the foreclosure sale should be void.

This conflict between state law and federal bankruptcy law is growing at a time in Massachusetts when the number ...
If you are interested in obtaining a® ID and Password, please contact us at 1-(800)-227-4908 or visit us at
Search Documents
eg., Environmental Insurance Coverage Under the Comprehensive General Liability Policy

Lexis® Web - The only search engine that delivers free web content specifically from legal sites validated by LexisNexis® attorney editors and includes tools for faster research and more relevant results.

LexisNexis Store
Research Now - Go to
Connect the Dots - Free 1 hour webcast
Share. Network. Discover. - Go to LexisNexis Communities