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.
The United States District Court for the District of Massachusetts has held that failure to respond to a purported Qualified Written Request, sent to a loan servicer pursuant to the Real Estate Settlement Procedures Act, 12 U.S.C. 2605 et seq. ("RESPA"), cannot serve as a defense to collection of a promissory note where a defendant suffered no actual damages as a result of any purported RESPA violation. Santander Bank v. Sturgis, et al., (C.A. No. 11-10601-DPW) (D. Mass. Nov. 13, 2013).
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).
Massachusetts' implied covenant of good faith and fair dealing does not apply to negotiations and contract preparations for a mortgage and accompanying promissory note, the First Circuit has held. In Latson v. Plaza Home Mortgage, Inc., the plaintiffs filed suit against their lender alleging, among other claims, violation of the implied covenant based on the lender's alleged failure to provide a proper commitment letter, good faith estimate, or other documents required by law, and gave them insufficient opportunity to review the terms in the loan documents. The United States District Court for the District of Massachusetts dismissed the case for failure to state a claim, and the borrowers appealed.
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).