Sabato v. Federal National Mortgage AssociationAnnotate this Case
Plaintiff Wayne Sabato appealed, and defendant Federal National Mortgage Association (FNMA) cross-appealed a trial court order in a suit brought by plaintiff to establish his homestead right in the subject property. Plaintiff’s wife, Cheryl Sabato, acquired the subject property, taking title by 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 plaintiff did not sign. Both Cheryl and plaintiff resided at the property since 2001. In January 2002, Cheryl refinanced the original mortgage, executing a new mortgage to HomeVest Mortgage Corporation (the first mortgage). Plaintiff did not sign the first mortgage, which was immediately assigned to CitiMortgage, Inc. In 2005, Cheryl granted a mortgage to National City Bank to secure a home equity line of credit; both Cheryl and plaintiff signed this, 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. Situs then sold its interest in the property to FNMA. Accordingly, FNMA held title to the property and the first mortgage. In 2016, FNMA notified the Sabatos that they might be evicted from the property. Plaintiff then filed the underlying suit, seeking to establish his homestead right in the property. Both parties moved for summary judgment. 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 plaintiff waived his homestead interest in the second mortgage, he could not now assert any homestead right. The trial court denied both motions, ruling that the second mortgage was a home equity line of credit, and that some portion of plaintiff's homstead exemption still existed and had to be set-off before FNMA owned the property free and clear. The trial court determined plaintiff was entitled to $120,000 less the amount owed on the note secured by the second mortgage at the time of the foreclosure sale. Finding no reversible error in the trial court's judgment, the New Hampshire Supreme Court affirmed.