Court lets lender undo mortgage discharge years after foreclosure error

A federal appeals court has ruled in favor of Emigrant Residential, LLC, allowing the lender to strike a mortgage discharge that had been mistakenly recorded years earlier. The decision, issued April 11, 2025, by the United States Court of Appeals for the First Circuit, resolves a prolonged dispute over a discharged mortgage following a voided foreclosure. The case offers key lessons for mortgage professionals on servicing policies, lien enforcement, and equitable remedies.

The matter began in 2008, when Linda S. Pinti and her spouse, Lesley R. Phillips, executed a $160,000 promissory note payable to Emigrant Mortgage Company (EMC), secured by a mortgage on their condominium in Cambridge, Massachusetts. After defaulting in 2009, they were sent a right-to-cure notice and foreclosure proceedings followed.

The foreclosure sale, however, was invalidated years later. In Pinti v. Emigrant Mortg. Co., 33 N.E.3d 1213 (Mass. 2015), the Massachusetts Supreme Judicial Court held the foreclosure void because EMC’s cure notice did not strictly comply with the terms of the mortgage. Following that ruling, Pinti and Phillips recorded a discharge of mortgage they had received from EMC in 2012.

That discharge became the focal point of the current litigation. EMC contended the discharge had been sent in error, noting that its established policy prohibited issuing discharges after third-party foreclosure sales. Although a discharge was prepared and mailed, the note was never returned, canceled, or marked satisfied. A company executive later attested that the discharge occurred because internal documentation failed to clarify that the loan had been foreclosed through a third-party sale.

After a prior action was dismissed due to standing issues, Emigrant Residential filed the present case in 2019. By then, it had recorded a 2009 assignment of the mortgage and obtained a 2019 assignment from the Federal Home Loan Bank of New York to reinforce its claim. The district court granted summary judgment to Emigrant, holding that the discharge was mistaken and that equitable relief was appropriate. Pinti appealed.

In affirming the lower court’s ruling, the First Circuit held that Emigrant had standing to challenge the discharge as the bearer of the note and assignee of the mortgage. The court found no material dispute that the discharge had been issued in error, relying on sworn affidavits, deposition testimony, and Emigrant’s internal loan servicing policies. The opinion also noted that the discharge listed EMC as the mortgagee despite its prior assignment of the mortgage to another Emigrant affiliate.

Pinti’s counterclaims were dismissed. The court held that her Chapter 93A claim under Massachusetts consumer protection law was time-barred, and that her claims for emotional distress lacked merit or were precluded by earlier proceedings.

Massachusetts law allows courts to strike mortgage discharges made by mistake, so long as third-party interests have not intervened. The First Circuit ruled that those conditions were met. Because Pinti and Phillips had not repaid the debt or exercised their right of redemption, and because the note remained in Emigrant’s possession, the court found that equity supported reinstating the mortgage lien.

For mortgage professionals, the case illustrates the potential consequences of clerical or procedural errors—especially in default and foreclosure contexts. It also affirms that mistakenly recorded discharges can be corrected through litigation, even after considerable time has passed, provided that clear records and chain of ownership are maintained.

The April 11 ruling reinstates Emigrant’s right to enforce the mortgage, setting the stage for potential further proceedings to recover on the debt or secure possession of the property. For lenders and servicers, the case is a reminder of the importance of precision in document handling—and the role of the courts in correcting mistakes that jeopardize valid liens.