Background
In June 2006, Leonard and Pauline Cortellino executed a promissory note and mortgage in favor of Mortgage Lenders Network USA, Inc. (MLN) for property in Lewiston, Maine. The mortgage was held by MERS as nominee for MLN. MLN filed for Chapter 11 bankruptcy in February 2007 and ceased operations after the bankruptcy closed in 2012. The mortgage was subsequently assigned multiple times, but the Maine Supreme Judicial Court’s 2014 decision in Bank of America, N.A. v. Greenleaf made clear that MERS assignments alone were insufficient to transfer mortgage ownership — creating a chain-of-title problem for all subsequent assignees.
To resolve the defective assignment, PHH Mortgage Corporation petitioned a Delaware Chancery Court to appoint a receiver for the defunct MLN. A receiver was appointed in February 2021 and assigned the Cortellino mortgage directly from MLN to Wilmington Savings Fund Society, FSB, as Trustee for Brougham Fund I Trust; that assignment was recorded in July 2022. The Cortellinos had been in default since 2014. BSI Financial Services sent a notice of default and right to cure on August 12, 2022, and Wilmington Savings filed a foreclosure complaint in October 2022. The Superior Court entered a judgment of foreclosure and sale in April 2025 after trial.
The Cortellinos appealed on two grounds: (1) that Wilmington Savings had not established ownership of the mortgage, and (2) that the right-to-cure notice was fatally defective because the amounts stated in it were internally inconsistent and did not accurately reflect what was required to cure the default.
The Court’s Holding
The Maine Supreme Judicial Court affirmed the Superior Court on the ownership issue but vacated the foreclosure judgment on right-to-cure grounds. The court held that the Delaware receiver’s post-bankruptcy appointment was valid, entitled to full faith and credit, and that the receiver’s assignment of the mortgage to Wilmington Savings was within the scope of the receiver’s authority — resulting in a valid transfer of ownership sufficient to confer standing to foreclose.
However, the court held as a matter of law that the right-to-cure notice was fatally defective under 14 M.R.S. § 6111. The notice demanded a total cure amount of $412,774.69, but the itemized charges listed did not add up to that total. Compounding the error, the notice broke down overdue monthly payments into sub-items, yet the sum of those sub-items differed from the stated total for that category. Because the notice contained multiple internal mathematical errors, it overstated the amount required to cure the default and failed to put the Cortellinos on adequate notice of what they needed to pay — rendering it materially insufficient as a matter of law.
Following its prior decisions in JPMorgan Chase Bank, N.A. v. Lowell (2017) and J.P. Morgan Mortgage Acquisition Corp. v. Moulton (2024), and applying the remedial framework from Finch v. U.S. Bank, N.A. (2024), the court vacated the judgment and remanded for entry of dismissal — not a judgment on the merits — while noting the Superior Court may on remand consider sanctions, attorney fees, or other relief against Wilmington Savings for pursuing a claim predicated on a clearly defective notice.
Key Takeaways
- A right-to-cure notice under 14 M.R.S. § 6111 must be internally consistent: the itemized charges must add up to the stated cure total, and any sub-itemized figures must reconcile with their stated category totals. Mathematical errors that overstate the cure amount are fatal as a matter of law.
- A defunct lender’s mortgage can be validly transferred through a court-appointed receiver, even after the bankruptcy estate is closed, provided the receivership order is valid and entitled to full faith and credit — this can cure a Greenleaf-style chain-of-title defect.
- A dismissal for failure to satisfy the statutory right-to-cure precondition is not a judgment on the merits, but courts retain discretion on remand to award attorney fees and impose sanctions against a foreclosing party that proceeded on a clearly defective notice.
- Associate Justice Hjelm concurred fully but reiterated his dissenting view that Finch v. U.S. Bank, N.A. — which limits the remedy for a defective notice to dismissal rather than a full adverse judgment — was wrongly decided, though he acknowledged it as controlling precedent.
Why It Matters
This decision reinforces Maine’s strict compliance standard for foreclosure right-to-cure notices. Lenders and servicers must ensure that every numerical figure in a cure notice is accurate and internally consistent; even arithmetic errors that overstate what a borrower owes will doom an otherwise valid foreclosure claim. The ruling puts mortgage servicers on notice that sending a notice riddled with mathematical inconsistencies — as BSI Financial did here — may expose them not only to dismissal but to attorney fee awards and sanctions on remand.
The case also provides a practical roadmap for lenders holding mortgages from defunct originators affected by Greenleaf: seeking appointment of a receiver in the originator’s state of incorporation to make a direct assignment can cure the chain-of-title problem. That procedural fix, however, does nothing to save a foreclosure action if the right-to-cure notice is independently defective — as this case illustrates.