by Robert J. Wichowski, Esq.
Bendett & McHugh
USFN Member (CT, MA, ME, NH, RI, VT)

The Connecticut Appellate Court, in HSBC Bank USA, National Association, Trustee v. Leslie I Nathan, applied the Connecticut Supreme Court’s holding in United States Bank National Assn. v Blowers^[1] and reversed the judgment of the trial court.  In so doing, the Appellate Court held that the trial court’s striking and elimination of the borrower’s counterclaims and defenses was improper despite the fact that the mortgagors’ disputes in the case concerned only actions that occurred after foreclosure had commenced in 2015^[2].

Prior to the Blowers decision, valid defenses and counterclaims to mortgage foreclosures in Connecticut could, with the exception of a few specifically enumerated defenses, only be related to the making, validity or enforcement of the note or mortgage and such disputes could not concern conduct that occurred after the foreclosure action had commenced.  The Blowers decision eliminated that restriction and, since foreclosures are equitable actions, allowed additional challenges to foreclosures.  Such defenses and claims may now include allegations of harm that occur during the pendency of the foreclosure action when such conduct is alleged to have materially added to the debt and substantially prevents the mortgagor from curing the default.  The Connecticut Supreme Court further held that such rights to challenge the foreclosure do not end until the foreclosure action is concluded, which potentially would allow challenges to foreclosures after judgment enters.

In this case, the mortgagor alleged that the mortgagee did not accept payments after the default and did not send witnesses to the court annexed mediation program hearings who were knowledgeable about the loan and as such, the mortgagee made it impossible for the mortgagor to cure the default and consequently ate away at the mortgagors’ equity in the property by increasing the debt.  The court held that since the mortgagors’ alleged defenses and claims against the Plaintiff were comprised of actions that the mortgagee undertook which increased the underlying debt and prevented the mortgagor from curing the default, under Blowers, those defenses and claims were improperly stricken.   The Appellate Court did specifically state that they are not deciding whether or not the defendant’s claims would ultimately be successful, only that the claims are legally sufficient and were improperly stricken.

This case shows the effect of the Blowers case in Connecticut and illustrates that foreclosures in Connecticut will be subject to more frequent and extensive litigation related to conduct during the foreclosure.