Tag Archives: standing

Utah Court Holds That Under Utah Law, MERS Was Not Required to Identify the Note-Holder in Order to Permit the Trustee to Proceed With Foreclosure

Posted on by

The plaintiff in Nielsen v. Aegis Wholesale Corporation, MERS et al., No. 10-606 (D. Utah May 4, 2011) argued that MERS divided the deed of trust as well as the promissory note. The court, in reaching their decision and rejecting the plaintiff’s argument, noted that “the court adopted the defendant’s argument that plaintiff had latched onto a failed theory—that a note and trust deed can be ‘split’ and rendered null and void.” The court subsequently dismissed the plaintiff’s claims against MERS with prejudice.

The court further went on to state that, “by law, each successor to the note also received the benefit of the security, and by contract, MERS was appointed as the nominee beneficiary under the First Deed of Trust. Contrary to the plaintiff’s argument, MERS had established its rights with respect to foreclosure on the security and MERS had, at all relevant times been, entitled to act as beneficiary under the First Deed of Trust.”

The court further noted that under Utah law, MERS was not required to identify the note holder in order to permit the trustee to proceed with foreclosure.

Massachusetts District Court Dismisses Homeowner-Plaintiff’s Challenge to Assignment Due to Lack of Standing

Posted on by

The two actions from Oum v. Wells Fargo Bank, N.A., et al, 1:11-cv-11663, No. 23 (D.Mass. Jan. 4, 2012) reflected nearly identical facts. Both cases arose from an allegedly invalid assignment of a mortgage from defendant Sand Canyon to Wells Fargo.

Plaintiffs argued that because the assignments of their mortgages were invalid, the foreclosures by Wells Fargo as trustee on their homes were invalid as well. After considering the plaintiff’s contentions, the court dismissed the plaintiff’s claims, after holding that the non-party plaintiffs lacked standing to challenge the assignment.

Plaintiffs had asked the court to enjoin Wells Fargo from proceeding with any eviction action [Count 1]; to quiet title by declaring them the “sole owners” of the properties [Count 2]; and to grant appropriate relief for Wells Fargo as trustee’s breach of the duty of good faith and reasonable diligence [Count 3].

Defendants argued that plaintiffs lacked standing to challenge the validity of the assignments Sand Canyon made to Wells Fargo as trustee of their respective mortgages because plaintiffs were neither parties to the contractual assignments, nor were they third-party beneficiaries. Plaintiffs argued that because they had a “claim of rightful legal ownership” to the respective properties, they have standing to contest the “cloud” on their wrongfully divested title. The court sided with the defendants, finding that an assignment is a contract, and the plaintiffs were not parties to the contract.

Massachusetts Trial Court Limits Ibanez Holding by Rejecting Plaintiff’s Proposition That Foreclosing Party Needs to Hold The Mortgage in Order to Bring a Service Member’s Action

Posted on by

This action commenced in this court on August 12, 2009. The plaintiff in Randle v. GMAC, No. 09 MISC 408202 GHP, Allison Randle, sought to prevent a foreclosure sale by defendant GMAC Mortgage, LLC [GMAC], and asked the court for judgment declaring that GMAC did not hold any claim secured by a certain mortgage recorded with the county registry of deeds. Therefore GMAC lacked standing to bring such an action against plaintiff Randle pursuant to the Servicemembers Civil Relief Act, and under legislation enacted in Massachusetts under and pursuant to that federal law.

Partially relying on the holding from U.S. Bank Nat’l Assoc. v. Ibanez, 17 LCR 202 (2009), the plaintiff claimed that she had a right to challenge the standing of GMAC to have filed the Servicemembers Case as a vehicle to vindicating this right, she had filed the Miscellaneous Case.

In relying on Ibanez the court found that the plaintiff confused or conflated the issue in Ibanez with the issues in her case. In Ibanez two foreclosures were determined to be invalid because the foreclosing parties failed to comply with the provisions of G.L. c. 244, § 14. These provisions required that requisite notice be given which “identifies the holder of the mortgage.” See Ibanez, 17 LCR at 204 [failure to identify holder of mortgage renders sale void as matter of law]; Ibanez, 17 LCR at 206-07 [foreclosure invalid where foreclosing party named in notice had not been assigned mortgage either on or off record].

In reaching this decision in Ibanez, the Land Court determined that a bank did not “hold” a mortgage, within the meaning of G.L. c. 244, §14, before a valid assignment had been executed and delivered. However, it was also noted that nothing from the Ibanez decision stood for the proposition that a foreclosing party needs to “hold” the mortgage to file a complaint under the Servicemembers Civil Relief Act for a determination that the mortgagor or owner is not entitled to the benefits of the federal Act, and the plaintiff’s complaint pointed to neither an authority in support of such a contention nor precedent in support of her contention.

Accordingly, the court in the current case decided there was no need to consider the question of whether GMAC Mortgage had standing to commence the Servicemembers Case, deciding that the answer to such a question could not and did not affect the outcome in such a case.

Massachusetts Bankruptcy Court Grants Assignee Bank’s Motion For Relief, Denies Debtor’s Assignment Challenges and Home Affordable Modification Program Claim

Posted on by

Aurora, as an assignee of a Chapter 13 debtor’s mortgage, moved for relief from stay to exercise its rights in property, and debtor objected to assignee’s standing and on the ground that his post petition payment default was the result of an improper refusal to modify his mortgage under the government’s Home Affordable Modification Program (HAMP). After considering arguments, the court decided In re Lopez, 446 B.R. 12, 18–19 (Bkrptcy.D.Mass.2011) by granting Aurora’s motion for relief.

The Debtor raised a plethora of questions regarding Aurora’s standing to prosecute the motion for relief. First, he contended that an assignment of the mortgage, without the note, was void. Next, the Debtor argued that MERS, as nominee, could not assign the mortgage because it was merely a title holding entity. Further, he noted that the assignment could not assign the note because MERS never held it.

The Debtor also found fault with the note, complaining that the endorsements were undated, thus concealed the date of the transactions. He further questioned whether the signatory of two of the endorsements could have been an authorized officer as the final endorsement is in blank, the Debtor asserted that the current holder of the note was unknown, making it unclear who authorized MERS to assign the mortgage.

Further, the Debtor attacked the validity of the assignment on the basis that Aurora had not proven that the signatory was sufficiently authorized to execute the assignment.

With respect to HAMP eligibility, the Debtor argued that the monthly payment used to determine borrower eligibility included a monthly payment of principal regardless of whether the expense was included in the Debtor’s current mortgage payment. Furthermore, he contended that Aurora mischaracterized the interest rate as adjustable rather than fixed. As such, the provisions regarding rate resets relied on by Aurora are inapplicable.

In determining whether a creditor has a colorable claim to property of the estate, the court found that Aurora has established a colorable claim to the Property as Mortgagee.

First, the Debtor asserted that the assignment of the mortgage, without the note, was void, but under Massachusetts law, “where a mortgage and the obligation secured thereby are held by different persons, the mortgage is regarded as an incident to the obligation, and, therefore, held in trust for the benefit of the owner of the obligation.” Accordingly, even though MERS never had possession of the Note, it was legally holding the Mortgage in trust for the Note holder.

Second, the Debtor contended that MERS, due to its status as a nominee, could not assign the Mortgage to Aurora. The court rejected this argument as it misapprehended the meaning of “nominee.” Though MERS never held the Note, it could, by virtue of its nominee status, transfer the Mortgage on behalf of the Note holder.

The remainder of the Debtor’s arguments involved challenges to the assignment authorization. Specifically, whether the signatory was authorized to execute the assignment; whether MERS was authorized to assign the mortgage; whether the officers endorsing the note had authorization to do so; whether, given the absence of transaction dates, the endorsements were placed on the note only recently; and the fact that the final endorsement on the note is blank, rendering it a bearer instrument negotiable by transfer of possession alone.

The Court found that the Debtor did not affirmatively state that there were any defects in Aurora’s chain of title; rather he merely suggested that an evidentiary hearing is necessary to be sure. This, the court noted, was not the standard.

Having determined that Aurora is a party in interest, the court considered whether relief from stay was warranted. The court found that the Debtor had not articulated any theory through which he could have asserted standing to obtain the relief he sought.

Massachusetts Trial Court Grants Defendant Bank’s Motion For Summary Judgment in Service Member Civil Relief Act Case

Posted on by

The Plaintiff in Randle v. GMAC, No. 09 MISC 408202 GHP filed a complaint seeking, among other things, a declaration that defendant GMAC Mortgage did not hold any claim secured by a mortgage recorded with the County Registry, and lacked standing to bring an action against the plaintiff pursuant to the Service Members Civil Relief Act.

Summary judgment was sought by the defendant and granted. It was undisputed that GMAC was the current holder of the mortgage, and therefore there were only two issues and one sub-issue left in contention.

The first issue was whether the plaintiff’s claimed right to challenge the standing of GMAC to have filed the Service Members Case required a judgment in the previous case, declaring the foreclosure invalid; and whether the plaintiff was entitled to the ninety-day right to cure set out in state law.

In deciding the judgment from the Service Member case, the court considered the plaintiff’s argument that due to the chronology of the assignments of the mortgage, and the recording with the registry, relative to the filing and prosecution of the Service Member’s case by GMAC, and also due to evident discrepancy in the date the judgment in the Service Member case was entered on the docket, the foreclosure sale by GMAC cannot be valid and cannot be effective to pass a title.

The court rejected this line of argument and found that such an argument ignored the long established limited scope of Service Members proceedings in Massachusetts. The court noted that a foreclosure is not invalid because title passed on a date prior to the issuance of the judgment in a Service Members case, which has a limited scope and purpose does not permit litigation of broader issues involving the relationship between the borrower and the lender.

Next, the court considered the standing of the mortgagee. The plaintiff claimed a right to challenge the standing of GMAC to have filed the Service Members case. GMAC argued that the standing of a mortgagee to commence a Service Member action was not a live issue in determining the validity of a foreclosure when the mortgage was the record holder of the subject mortgage at the time of the foreclosure. The court agreed with GMAC’s argument.

Lastly, the plaintiff argued that GMAC was unable to foreclose because it did not provide the plaintiff with a 90-day the notice and opportunity to cure a default, as mandated by state law. However, upon review of the designated state law, the court found that the plaintiff was not entitled to such notice, because the specified state law did not apply “to such mortgages whose statutory condition had been voided prior to May 1, 2008.”

Massachusetts District Court Interprets Ibanez Narrowly in Deciding That Plaintiff-Homeowner Lacked Standing to Challenge Bank’s Standing to Foreclose

Posted on by

This action arose out of an attempted foreclosure by defendant Aurora Loan Services on plaintiff David Kiah’s property. Based on the recent holding from U.S. Bank National Ass’n v. Ibanez, 458 Mass. 637, 941 N.E.2d 40 (2011), Kiah sought a declaratory judgment to make the “mortgage on record legally null and void.” The Massachusetts District Court in deciding Kiah v. Aurora Loan Services, LLC, No. 10-40161-FDA, 2011 WL 841282 (D.Mass. Mar.4, 2011) considered the Massachusetts Supreme Court’s holding from Ibanez, along with the plaintiff-homeowners’ arguments, and concluded that granting the defendant’s dismissal was proper.

The court found that the plaintiff’s claims were merit-less, as he challenged neither the note nor the note’s assignment to Aurora. As expressed in Ibanez “By law, the transfer of the note automatically transfers an equitable interest in the underlying mortgage, even without a formal assignment.” An equitable right to the mortgage was thus transferred to Aurora along with the note.

The court noted that the Ibanez holding did not require a reconsideration of the lower court’s judgment. In Ibanez the Massachusetts Supreme Court held that a foreclosure sale made by a party who holds the note but not the mortgage is void as a matter of law. In that case, the note holder provided no evidence of assignment prior to foreclosure. However here, there was a facially valid assignment of the mortgage from MERS to Aurora prior to the foreclosure sale. To the extent the assignment was defective, the court interpreted Ibanez required, at most, that a confirmatory assignment be executed and recorded.

Massachusetts District Court Limits Massachusetts Supreme Court’s Broad Holding From Ibanez By Limiting Challenges to Assignments

Posted on by

In Aliberti v. GMAC Mortgage, LLC, 779 F.Supp.2d 242 (D.Mass.2011), the plaintiff homeowner relied on the seemingly broad-reaching holding handed down by the Massachusetts Supreme Court in U.S. Bank National Ass’n v. Ibanez, 458 Mass. 637, 941 N.E.2d 40 (2011). On facts similar to Ibanez the plaintiff challenged the assignment from MERS to GMAC, thus challenging GMAC’s ability to foreclose.

The Supreme Court in Ibanez stated “any effort to foreclose by a party lacking jurisdiction and authority to carry out a foreclosure under Massachusetts law is void.“ Then adopted case law stating that attempts to foreclose on a mortgage by a party that “had not yet assigned the mortgage results in a structural defect that goes to the very heart of the defendant’s ability to foreclose and renders foreclosure sale void.”

This holding left the question still open as to whether mortgagors have a legally protected interest in assignments to which they are not a party. The district court read the holding from Ibanez as not providing an independent basis for mortgagors to collaterally contest previously executed mortgage assignments to which they are not a party. Further, the holding granted neither an interest nor rights to the third party.

The court noted that in Ibanez, the land court was specifically tasked with evaluating the sufficiency of the assignment process, and the banks, as foreclosing parties and actual parties to the mortgage assignment, had standing to seek court review of the validity of the assignment process.