## Facts

- Several banks held residential mortgages on properties located in Springfield, Massachusetts and initiated foreclosure proceedings on some properties.
- Springfield enacted a Vacant Foreclosing Properties ordinance requiring the “owner” of residential property in foreclosure to maintain the premises to prevent blight and safety hazards.
- The maintenance ordinance defined “owner” to include mortgagees that had commenced foreclosure, and required a $10,000 cash bond per foreclosure as security for compliance and reimbursement of municipal costs.
- Springfield also enacted a Foreclosure Mediation ordinance requiring mortgagees to pursue a specified mediation/settlement process with borrowers before conducting a foreclosure sale.
- The banks contended the ordinances imposed new costs and operational duties during foreclosure beyond those in their mortgage contracts and beyond state-law foreclosure requirements.
- The banks sued for declaratory and injunctive relief; the City removed the case to federal court; the parties filed cross-motions seeking judgment.

## Issues

1. Whether the ordinances substantially impaired existing mortgage contracts in violation of the Contracts Clause by imposing maintenance duties and a $10,000 bond on foreclosing mortgagees and adding pre-sale mediation requirements.
2. Whether Massachusetts foreclosure and housing/property-maintenance statutes preempted the ordinances under field or conflict preemption principles.
3. Whether the ordinances violated other constitutional protections, including due process and takings-type theories.

## Decision

- The court upheld both ordinances and entered judgment for the City.
- The court held the ordinances did not violate the Contracts Clause because any impairment of mortgage contracts was not substantial and, in any event, the measures served a significant public purpose and were reasonable means to address foreclosure-related blight.
- The court held the ordinances were not preempted by Massachusetts law because the Legislature had not occupied the field to the exclusion of municipal action and the ordinances did not conflict with state statutes.
- The court rejected the banks’ additional constitutional challenges, concluding the ordinances were rationally related to legitimate governmental objectives and provided sufficient process.

## Legal Principles

- Contracts Clause analysis proceeds by asking (1) whether a law impairs a contractual relationship, (2) whether any impairment is substantial, and (3) if substantial, whether the law is reasonable and appropriate to serve a significant and legitimate public purpose.
- Regulatory conditions attached to exercising a contractual remedy (such as foreclosure) in a heavily regulated area are less likely to constitute a substantial impairment, particularly when core contract terms and the basic right to foreclose remain intact.
- Municipal ordinances are not field-preempted merely because the state regulates the same general area; exclusion of local action requires a clearer indication of legislative intent.
- Conflict preemption requires a direct inconsistency; local requirements that supplement state minimum procedures and further distinct public-safety objectives may be permissible if they do not make compliance with state law impossible or negate state-granted rights.
- Economic and social regulation generally survives substantive due process review if rationally related to legitimate public purposes; a compliance bond tied to anticipated municipal costs may be treated as a regulatory condition rather than a taking.

## Conclusion

The court upheld Springfield’s foreclosure-related maintenance/bond and mediation ordinances, concluding they did not substantially impair mortgage contracts, were justified by legitimate public-health and safety goals, and were neither field- nor conflict-preempted by Massachusetts law.


Easthampton Sav. Bank v. City of Springfield, 874 F. Supp. 2d 25 (D. Mass. 2012)