Sabato v. Fed. Nat'l Mortg. Ass'n, 2018-0047

CourtSupreme Court of New Hampshire
Citation210 A.3d 205,172 N.H. 128
Docket NumberNo. 2018-0047,2018-0047
Parties Wayne SABATO v. FEDERAL NATIONAL MORTGAGE ASSOCIATION
Decision Date03 May 2019

172 N.H. 128
210 A.3d 205

Wayne SABATO
v.
FEDERAL NATIONAL MORTGAGE ASSOCIATION

No. 2018-0047

Supreme Court of New Hampshire.

Argued: January 10, 2019
Opinion Issued: May 3, 2019


210 A.3d 207

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.

172 N.H. 129

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

172 N.H. 130

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

210 A.3d 208

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." That waiver, the court determined, was "only to the extent necessary to enforce the second mortgage."

The court then ruled:

In this case, the second mortgage at issue was a home equity line of credit with a maximum principal balance of $ 65,000, and the foreclosure auction winner paid $ 64,872.01 as consideration for the foreclosure deed. Thus, assuming that the $ 120,000 statutory exemption applies, it appears that some portion of the plaintiff's homestead exemption still exists and must be set-off before FNMA owns the property free and clear.... The Court finds that the plaintiff is entitled to $ 120,000 less the amount owed on the note secured by the second mortgage at the time of the foreclosure sale. In the event FNMA seeks to partition the property instead of paying this amount, FNMA may request a hearing on this issue.2
172 N.H. 131

(Footnotes omitted.) Subsequent motions for reconsideration by both parties were denied, and both parties now seek appellate review.

"In reviewing the trial court's rulings on cross-motions for summary judgment, we consider the evidence in the light most favorable to each party in its capacity as the nonmoving party and, if no genuine issue of material fact exists, we determine whether the moving party is entitled to judgment as a matter of law." Maroun v. Deutsche Bank Nat'l Trust Co., 167 N.H. 220, 224-25, 109 A.3d 203 (2014) (quotation omitted). "If our review of that evidence discloses no genuine issue of material fact and if the moving party is entitled to judgment as a matter of law, then we will affirm the grant of summary judgment." Id. at 225, 109 A.3d 203 (quotation omitted). We review both the trial court's application of the law to the facts and its statutory interpretation de novo. Polonsky v. Town of Bedford, 171 N.H. 89, 93, 190 A.3d 400 (2018).

The plaintiff contends that the trial court erred in ruling that his homestead exemption must be reduced by the amount

210 A.3d 209

outstanding on the second mortgage. He argues that the second mortgage "does not reduce or eliminate [his] homestead exemption since [he] did not waive his homestead right in the First Mortgage, which remains in full force and effect. The Second Mortgage is subject to, and subordinate to, the First Mortgage and the outstanding homestead right of [the plaintiff]."

FNMA also contends that the trial court erred, but in the opposite direction. It asserts that "the homestead exemption is $ 0.00 because the homestead was completely waived in the mortgage which is the subject of this appeal and the other mortgage has nothing to do with this matter." FNMA, therefore, contends that the trial court erred in ruling that to obtain title free and clear of the plaintiff's homestead right, FNMA must pay him the difference between $ 120,000 and the amount due on the second mortgage.

In order to resolve the issues on appeal, we must construe the statutory homestead exemption.

The interpretation and application of statutes present questions of law, which we review de novo. In matters of statutory interpretation, we are the final arbiters of the legislature's intent as expressed in the words of the statute considered as a whole. When examining the language of a statute, we ascribe the plain and
172 N.H. 132
ordinary meaning to the words used. We do not construe statutes in isolation; instead, we attempt to do so in harmony with the overall statutory scheme.

Maroun, 167 N.H. at 225, 109 A.3d 203 (citations omitted). "Statutory homestead protections are universally held to be liberally construed to achieve their public policy objective." Id.

The homestead exemption statute, RSA chapter 480 (2013 & Supp. 2018), provides that "[e]very person is entitled to $ 120,000 worth of his or her homestead, or of his or her interest therein, as a homestead." RSA 480:1 (Supp. 2018). "The statutory protection of the homestead right" applies not only to the homeowner, but "also extends to spouses who occupy the homestead but are not title owners of the property." Maroun, 167 N.H. at 226, 109 A.3d 203. The homestead statute further provides that "[t]he homestead right is exempt from attachment during its continuance from levy or sale on execution, and from liability to be encumbered or taken for the payment of debts, except in the ... cases" listed in paragraphs I through V of that section. RSA 480:4 (Supp. 2018). The instant case involves paragraph III, which provides an exception "[i]n the enforcement of mortgages which are made a charge thereon according to law." RSA 480:4, III. That paragraph, in turn, implicates RSA 480:5-a, which provides that "[n]o deed shall convey or encumber the homestead right, except a mortgage made at the time of purchase to secure payment of the purchase money, unless it is executed by the owner and wife or husband, if any, with the formalities required for the conveyance of land." RSA 480:5-a (2013).

To address the parties' arguments on appeal, we must examine the effect of the plaintiff's waiver of homestead in the second mortgage, as well as his lack of waiver in the first. We rely upon our own case law and cite cases from other jurisdictions to the extent they do not conflict with New Hampshire law.

"The general rule regarding priority among competing mortgages, in the absence of a statutory provision to the contrary, is ‘prior in tempore, potior...

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