Just back from a short vacation & took a look at the mortgage chain for this.

The Restrictions in the deed are quite clear - any refinancing needs the consent of the Commonwealth of Massachusetts.  In all the refis, all by the same lender, I found only one consent filed in the ROD.  The owner paid 135K for the unit and the total o/s mortgage obligations at the time of the foreclosure were around 315K, which clearly is in violation of the affordability restrictions in the deed.  I looked at some other, non-affordable units and the mortgage amounts were similar to the prior owner's, so I am guessing that the prior owner's mortgage were way out of line in terms of affordability.

What is unusual is that it was the same lender who refinanced this loan & did equity lines for the borrower as well - so underwriting had to have known about the affordability clause.

I believe the Commonwealth's argument is that the mortgage(s) were invalid by virtue of the affordability restrictions & thus have no effect against the unit (not the owner).

The litigation will probably take forever and a day, but it will be interesting to see who prevails.