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Foreclosure Litigation

MERS Requires No Authorization to Assign Mortgage

A Judge of the Massachusetts Superior Court, relying on earlier Massachusetts Appeals Court cases, has held that Mortgage Electronic Registration Systems, Inc. ("MERS") does not need authorization from the holder of the promissory note secured by a mortgage before assigning the mortgage to another entity.  O'Neil et al. v. The Bank of New York Mellon, 33 Mass. L. Rptr. 1, 8 (Mass. Super. July 20, 2015).

Supreme Judicial Court: 'Try Title' Actions Challenging Foreclosure Are Only Available After Foreclosure Occurs

In a decision handed down earlier this month, the Massachusetts Supreme Judicial Court (the "SJC") has resolved a split among Land Court justices regarding the availability of a "try title" action brought against a mortgagee prior to foreclosure.

Fremont Investment's Mortgage Foreclosure Injunction Not Retroactive

A Massachusetts Superior Court judge has held that the 2008 injunction against foreclosure of certain Fremont Investment & Loan ("Fremont") mortgages did not apply to Fremont mortgages assigned to third parties prior to the entry of the injunction.  Moronta v. Nationstar Mortgage, LLC et al., 32 Mass. L. Rptr. No. 14, 339 (November 24, 2014) (Connors, J.).

SJC Says Springfield Foreclosure Ordinances Are Preempted

In a decision handed down earlier this month, the Supreme Judicial Court (the "SJC") has held that two foreclosure-related local ordinances enacted by the City of Springfield (the "City") are preempted by existing Massachusetts statutes.

Right-to-Cure Notice Naming Mortgage Servicer Deemed Effective

Naming a mortgage servicer as mortgagee on a statutory right-to-cure notice satisfies the requirements of the Commonwealth's pre-foreclosure right-to-cure statute, according to a recent decision of the Appeals Court.

Massachusetts Appeals Court Upholds MERS Mortgage System

The Massachusetts Appeals Court has joined the U.S. Court of Appeals for the First Circuit in upholding the Mortgage Electronic Registration Systems, Inc. ("MERS") business model under Massachusetts law.  Explicitly referencing the First Circuit's decision in Culhane v. Aurora Loan Services of Nebraska, 708 F.3d 282 (1st Cir. 2013), the Appeals Court in Sullivan v. Kondaur Capital Corp., 85 Mass.App.Ct. 202 (2014), held that mortgagors have standing to challenge an assignment of their mortgages, but only to the extent that such assignment is void, not merely voidable.  Further, the Appeals Court found that the MERS system of mortgage assignments fully comports with Massachusetts law.

First Circuit Affirms Culhane, Woods, and MERS Assignments of Mortgages

The United States Court of Appeals for the First Circuit has reaffirmed its prior holdings in Culhane v Aurora Loan Services of Nebraska, 708 F.3d 282 (1st Cir. 2013) and Woods v. Wells Fargo Bank, N.A., 733 F.3d 349 (1st Cir. 2013) regarding Mortgage Electronic Registration Systems, Inc.'s ("MERS") assignments of mortgages.  The Court in Wilson v. HSBC Mortgage Services, Inc., 2014 WL 563457 (1st Cir. Feb. 14, 2014) found that while a plaintiff has standing to challenge a void assignment, they lack standing to challenge allegedly voidable assignments, and the MERS system for assignments comports with Massachusetts law.

Contemporaneous Evidence of Off-Record Assignments Satisfies Ibanez

The Massachusetts Land Court division of the Trial Court has affirmed that contemporaneous evidence of off-record assignments are adequate to satisfy the requirements of U.S. Bank N.A. v. Ibanez, 458 Mass. 637 (2011).

First Circuit Finds No Private Right of Action Under HAMP

The First Circuit has affirmed a holding finding that no private right of action exists for homeowner-borrowers under the Home Affordable Modification Program ("HAMP"), bringing clarity on this issue to courts within the Circuit.  In the underlying mater, Mackenzie v. Flagstar Bank, FSB, 2013 WL 139738 (D. Mass. Jan. 9, 2013) aff'd, 2013 WL 6840611 (1st Cir. Dec. 30, 2013), Magistrate Judge Bowler of the United States District Court had held a borrower is not an intended third-party beneficiary of the Servicer Participation Agreement ("SPA") among the banks and the federal government relating to HAMP.  The District Court further held that absent an independent duty to modify the mortgage, neither the existence of a mortgagor-mortgagee relationship nor HAMP itself created any duty enforceable by the borrower.

Claims Against Failed Institutions Must Comply with Claims-Processing Regime Set Forth in FIRREA

The U.S. Court of Appeals for the First Circuit recently confirmed that the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) provides a firm jurisdictional bar to consumer protection claims based on loans made by failed institutions but now held by successor banks following a transfer facilitated by the Federal Deposit Insurance Corporation (FDIC) unless the claimants have complied with a strict administrative regime.  In Demelo v. U.S. Bank National Association, 727 F.3d 117 (1st Cir. 2013), in which Stephen Reilly and Jennifer Greaney of Fitch Law Partners LLP represented the defendant U.S. Bank National Association (U.S. Bank), the First Circuit held that claimants against a failed institution must comply with the claims-processing regime prescribed by FIRREA.

Title Insurer Not Required to Defend Suit Against Validity of Underlying Debt

The Massachusetts Supreme Judicial Court has held that a title insurer has no duty to defend a bank against a third-party suit challenging the validity of the underlying debt, absent a specific provision in the title insurance policy envisioning such a claim.  Deutsche Bank National Association v. First American Title Insurance Company, 465 Mass. 741 (2013).

First Circuit Upholds MERS Mortgage System Under Massachusetts Law

The First Circuit has affirmed a holding finding that the system under which mortgages are held in the name of Mortgage Electronic Registration Systems, Inc., commonly known as MERS, comports with Massachusetts law relating to mortgage transactions.  In the underlying matter, Culhane v. Aurora Loan Services of Nebraska, 826 F.Supp.2d 352 (D.Mass. 2011), Judge Young of the United States District Court had held that a mortgagor possesses standing to challenge the chain of assignment of his or her mortgage in defense to a foreclosure action, but further held that the MERS system of registration and transfer of mortgages is lawful.

Even Technical Errors Can Invalidate Foreclosure

Even technical errors in mortgage and foreclosure documents can invalidate the foreclosure and subsequent sale of a condominium unit, according to the Massachusetts Housing Court.  Following foreclosure, and purchase at the foreclosure sale by the foreclosing bank, the former owner asserted that erroneous references in the foreclosure documentation for the unit invalidated the foreclosure and left her with the superior right of possession.  The Housing Court, J. Muirhead, agreed and invalidated the foreclosure.  East West Bank v. Chung, Lawyers Weekly No. 17-001-13.

Liability for Payment of Note Required to Rescind Mortgage

A mortgagor who is not personally liable for payment of the note securing a property loan cannot rescind the loan transaction or mortgage, the United States Bankruptcy Court for the District of Massachusetts has held.  In re Smith-Pena v. Wells Fargo Bank, N.A.In re Smith-Pena v. Wells Fargo Bank, N.A., 2013 WL 28696 (Bankr. D. Mass. Jan. 2, 2013).

Standing Is Limited In 'Soldiers and Sailors' Actions - For Both Plaintiffs and Defendants

Earlier this week, the Massachusetts Supreme Judicial Court (the "SJC") held that a plaintiff who is not a present mortgagee (or the mortgagee's agent) has no standing to bring an action under the Massachusetts Soldiers' and Sailors' Civil Relief Act for a determination that the named defendant is not entitled to the protections of the Federal Servicemembers Civil Relief Act (the "SCRA"). 

First Circuit Court of Appeals Hears Culhane Case

A panel of the United States Court of Appeals for the First Circuit heard oral argument in the matter of Oratai Culhane v. Aurora Loan Services of Nebraska earlier this week.  The panel was comprised of Chief Judge Hon. Sandra L. Lynch, Senior Circuit Judge Hon. Bruce M. Selya, and retired U.S. Supreme Court Associate Justice Hon. David H. Souter, sitting by designation.  The Culhane case is notable for District Court Judge Hon. William G. Young's discussion in a summary judgment decision of Mortgage Electronic Registration Systems, Inc. ("MERS") and the propriety of MERS's system of assigning mortgages held in its name to loan servicers prior to foreclosure.  See Culhane v. Aurora Loan Serv. of Neb., 826 F. Supp.2d 352 (2011).  

Allegations on 'Information and Belief' Not Enough to Stop Mortgage Foreclosures

One less-discussed but important aspect of the Supreme Judicial Court's ("SJC's") decision in Eaton v. National Federal Mortgage Association, 462 Mass. 569 (2012), is found in its most narrow ruling.  Even though the Court held that the named plaintiff, Henrietta Eaton, could benefit from the SJC's pronouncements despite an otherwise prospective application, the Court nonetheless struck down the preliminary injunction that brought Ms. Eaton to the SJC in the first place.

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