Mortgages

Mass. Appeals Court Rebuffs Mortgagee’s Novel Bid For Equitable Subrogation

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In its decision yesterday in Wells Fargo Bank v. Comeau (pdf), the Massachusetts Appeals Court rejected the plaintiff mortgagee’s attempt to use the doctrine of equitable subrogation in a novel way:  to impose on a surviving wife the obligation to pay a note signed by her late husband where the wife had not signed either the note or the mortgage.

The boiled down facts are as follows.  Husband and wife owned a home as tenants by the entirety.  In 2003 the property was mortgaged to a local bank.  Husband alone signed the note; husband and wife signed the mortgage.  In 2005 husband refinanced with a different bank.  This time husband alone signed both the note and mortgage.  In 2008 husband died, leaving a balance due on the note.  Wells Fargo, successor of the refinancing bank, did not assert a claim against husband’s estate before the statute of limitations expired.  Instead Wells Fargo sued wife, claiming its mortgage should be equitably subrogated to the position