Wayne Sabato v. Federal National Mortgage Association

Summary

The Supreme Court of New Hampshire affirmed orders concerning the plaintiff’s homestead right after foreclosure of a second mortgage. The court held that the plaintiff’s waiver of homestead rights in the second mortgage gave that mortgage priority over the first mortgage up to the value of the homestead exemption, while any remaining exemption continued in the property and was not extinguished by foreclosure.

Holdings

1. Because the plaintiff did not sign the first mortgage and it was not a purchase-money mortgage made at the time of purchase, the mortgage did not comply with RSA 480:5-a and did not convey or encumber his homestead interest. His homestead right therefore had priority over the first mortgage upon foreclosure.
2. The plaintiff waived his homestead right as to the second mortgage by signing it as the husband of the title owner.
3. The plaintiff's homestead waiver extended only as far as necessary to enforce the second mortgage; it did not waive the entire homestead exemption.
4. The second mortgage had priority over the first mortgage up to the value of the plaintiff's homestead exemption, but any portion of the exemption remaining after satisfaction of the second mortgage survived the foreclosure as an interest in the property and was not extinguished.
5. The plaintiff retained a homestead interest equal to $120,000 less the amount owed on the second-mortgage note at the time of foreclosure. To clear that interest from its title, FNMA must pay the value of the remaining interest or pursue partition.
6. The plaintiff's signing of the second mortgage did not deed or convey his interest in the property to the mortgagee because he did not own the property and had no title or estate to convey.

Questions Presented

1. Whether the plaintiff's failure to sign the first mortgage meant that the first mortgage did not encumber or obtain priority over his homestead right.
2. Whether the plaintiff's signature on the second mortgage waived his homestead right as to that mortgage.
3. Whether the waiver extended only to the amount necessary to enforce the second mortgage or instead extinguished the plaintiff's entire homestead exemption.
4. Whether the portion of the homestead exemption remaining after satisfaction of the second mortgage survived the foreclosure sale as an interest in the property.
5. Whether FNMA could obtain title free and clear of the plaintiff's remaining homestead interest without paying its value or partitioning the property.
6. Whether signing the second mortgage conveyed the plaintiff's title or estate through warranty covenants.

Disposition

affirmed