i us bank v. -banez - amicus attorney general brief

8/4/2019 I US BANK v. -BANEZ - Amicus Attorney General Brief

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COMMONWEALTHF ~ ~ S S A C H U S E T T S

SUPREMEUDICIAL COURTSUFTOLK, ss . NO . 10694

I1.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR T I E

STRUCTURED ASSET SECURITIES CORPORATION MORTGA GE PASS-TIIROUGII CERTIFICATES, SERKS 2006-2,

Plaintif-App pellunl,

V .

ANTONIO IRANEZ,

Defendant-Appellee.

WELLS FARGO BANK, N.A.,AS TRUSTEE FOR AllPC 2005-OFT 1 TRUST,U F C ASSKI' BACKED CERTIFICATES SEIUES 200S-OPT I,

Pluint#Appellant,V

MARK A. LARACE AND TAMMY L. JARACE,Defendants-Appellees.

ON APPEAL FROM A JUDGMENT OF THE AN D COURT .

BRXEF OF TIW ATTORNEY G E N E W ON BEHALF O F THE

C O M M O ~ A L ' l W P MASSACHUSETTS, AMICIJS CURIAE

MhRTHA COAKLEYAlhrney General

John M. Stephan (UUO No. 649509)

Assistunt Attorney GeneralPublic Protection and Advocacy BureauConsumer Protection Division

One Ashburton Place, 18thFloorBoston, Massachusetts 02108-1598

(617) 727-2200 ext. 2959

[email protected]

Scptembcr 20,2010



T a b l e of C o nt e nt s

T,able of Contents ..................................... i

Table of Authorities ................................. iii

Issues Presented ...................................... I

1nterest.s of the Amicus Curiae’ . . . . . . . . . . . . . . . . . . ...

Statement of th.e Case ................................ 2

Statement of the Relevant Facts ....................... 4

Summary of the Argument . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Argument . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

1. PlainLiffs had no l e g a l authority to foreclbse

because they were n o t the original mortgagees,

were not authorized by the power of sale, and

because they lacked valid assignmentsof the

Ibanez and LaRace mortgages .................... 11

A. Plaintiffs are not the mortgagees of theIbanez or LaHace loans .................... 13

l3. Neither pl.aintiff was authorized by the

power o f sale in the respective mortgages . 16 C. The assorted securi,tization ocuments do not

establish or comprise valid assignments . . . 17

11. Not o n l y did plaintiffs lack legal authority to

foreclose, but the foreclosures are invalid

because the notices published prior to

foreclosure are fataI3.y .deficient . . . . . . . . . . . . . 20

A. G. 1,. c. 244, 5 14 requires that the noti.ce

identify the “present holder” of the

mortgage .................................... 1

B. Plaintiffs’ false identification o f

themselves as the “present holders” in their

i



foreclosure n o t i c e s renders the notices

f a ' t a l l y deficient: . . . . . . . . . . . . . . . . . . . . . . . . . 23

I11 . Plaintiffs' argument that th ey held th e mortga ges

notwithstanding the lac k of valid. written

assignments t is of the date of. he foreclosures i s

unsupported by law .............................. 24

IV There are no grounds on which to limit the Land

Court's decision t o f u t u r e cases . . . . . . . . . . . . . . . 2 7

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

ii



Table of Authorities

Casea

AtJ.a*ltir. Sav. Bank v. Ietropolitan.. . Bank &'Trust,

9 Mass. App. Ct. 286 (198.0) ........................ 14

BottomLy v. Kabachnick, 13 Mass. App. Ct. 480

(1982) .................................... 12, 22, 21 , 28

Commonwealth v. Adams, 416 Mass. 558 (1993) . . . . . . . . .2

-XCommonwealth v. Mass. C R I N C , 392 Mass. 79 (1984) . . . . . 1

Cousbelus v. Alexander, 315 M.ass 729, 730 (1944) . . . 15

I. . Flavin v. Morrissey, 327 Mass. 217 ( 1 9 5 1 . ) . . . . . . . . . . . 1.6

Hanna v. 'Town o f Fram&ham, 60 Mass. App. C L . 420(2004) ............................................. 14

Linsky v . Exchange Trust Co., 260 Mass. 15

(1927) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 , 1,5

Lowell Gas Co. v. Attorney General, 377 Mass. 37

.. ~ " ~,

(1.979) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Macurda v . Fuller, 225 Mass. 341 (7 .916) . . . . . . . . . . . . . 6

McGceevey v. Charlestown Fi ve Cents~....... Sav. Bank, 294

Mass. 480 (1936) ............................ 12, 22, 24

Milton.- Sav. Bank v . United States, 345 Mass. 302

(1963) ................................................ 21

Moore v. . Dick, 187 Mass. 207 (1905) ......... .2, 22, 24

Murphy v. Charlestown Sav.- Bank, 380 Mass. 738

(1980) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

-

Fer= v. Miller, 330 Mass. 2 6 1 (8.953) . . . . . . . . . . . . . . 4

Roche V. Farnsworth, '106Mass. 509 (i871) . , 12, 22,. 4

Seppala & Aho Constr. C n . v. Petersen, 373 Mass.

316 (1377) . . . . . . . . . . . . . .. . . . . . . . . . . . . .. . . . . . . . . . . . . 2 5

iii



Spraque v. K j . m b a l 1 , 213 Mass. 300 (1913) . . . . . . . . . . . .15

States Resources C o g . v . T h e A r c h i t c r A u r a l, .- Team,Inc., 4'33 F.3d 7 3 (1st Cic. 2 0 0 5 ) . . . . . . . . . . . . . . . ...21 _I_

Warden v. A d a m s , 35 Mass. 2 3 3 (1818) ............ 4, 15

S atu fes

G. 1,. c. 183, 5 21 ............................ 5 , 12, 1'1

G. 1,. c. 240, 5 6 .................................... 2

G . L . c. 244 , 5 1.4 .............................. passim

G . L. c. 259 , 5 1 .................................... 15

5 0 U . S . C . app . ' 5 3 ' 5 0 1 - 5 9 6 ............................. 7

i.v



Issues P resen t ed

1. Whether a party has the legal authoriLy to

foreclose on a mortgaqe if it does not have a n

interest in the mortgage at the time of the

foreclosure.

2. Whether a foreclosure n o k i c e t h a t [ails to

identify the present holder of a mortgaqe is l e g a l l y

suff ci.ent. even though the .identification f the

present holder is required by G. L. c. 244, 5 14.

3. Whether the Land Court's interpretation of

longstanding Massachusetts statutory requirements

shou1.d be rejected or .limited solely because

significant costs to t h c plaknkiffs will result.

I n t e r e s t s of t h e Amicus Curiae

The AtLorney.Genera1 has 'broad common law and

statutory powers to represent the public interest."

Commonwealth v. Mass.. CRINC, ,392 Mass.' 79, 8 8 (1984) .

She has both a general statutory mandate and, in many

instances, a specific statutory mandate, to protect

the public interest. -d. In additj-on, the Attorney

General h as a common law duty to represent the public

interest and,to nforce public rights. Lowell Gas Co.

v. Attorney General, 377 Mass. 37, 4 8 (1979).



The Attorney General is “ a n elected official

charged wi.th the duty of protecting the public

interest.“ Commonwealth v. A d a m s , 416 Mass. 558, 5 6 6 -

67

Attorney General has a profound i n t e r e s t : in t h e

enforcement of statutory requirements, andin the

enforcement if consumer protection statutes in

particular. Moreover, as the Commonwealth’s attorney-

in-chief, the Attorney General has an interest in

ensuring real property interests are conveyed

efficiently and accurately in the Copmanwealth. ‘.l’his

is particularly so where Massachusett-s law permits the

transfer of real property without. judicial.

involvement. In the absence of this supervision,

(1993) . ‘ A s the ch.ieflaw enforcement officer, the

strict compliance with the statutory requirements is

the only means to ensure the accuracy of public land

records and the integrity of the syst.emfor t.ransfer

of real property.

Statement o f the Case

The actions at issue here oriqinatcd in the Land

Court, where they were filed as independent actions

“to remove a cloud on tj.tle” u r s u a n t to G. I,. c . , 240 ,

5 6. , [ A 1 7 - 2 5 ] . In those actions, plaintiffs soughta

2



d e c l a r a t i o n. t h a t t h ey 'h ad pu b li .s he d t h e r e q u i r e d

f o .r e c lo s u re n o t i c e s i.n a n a c c e p t a b l e p u b l i c a t i . o n . -d .1

A f t , e r t h e t i m e Lo f i l e a r e s p o n s e e x p i r e d ,

p 1 , a i n t i f f s m o v e d for e n t r y of d e f a u l t j u d g m e n t s .

[ A 5 8 0 ] . The a c t i o n s w ere c o n s o l i d a t e d a nd t h e L and

C o ur t r e q u e s t e d b r i e f i n g on t h e i s s u e of .whether : t h e

. p l . a i n t i f f s were t h e i e g a l h o l d e r s o f t h e m or tg ag e, s a n d

w h et he r t h e n o t i c e s of s a l e c om p li ed . w i t h G . L .

c. 2 4 4 , 5 1.4. L A 5 7 8 - 7 9 1 .

O n March 26, 2009, t h e Land Cour t i s sued a

M em 0rand.m a nd O rd e r de ri yi ny p l a i n t i f f s ' m o t i o n s f o r

e m t ry of d e f a u l t ju dy m en t a n d found t h a t t he

f o re c l. o su r es w ere i n v a l i d b ec a us e t h e n o t i c e s f a i l e d

t o . n a m e t h e m o r t g a g e h o l d e r a s of t h e d a t e o f s a l e as

r e q u i r e d by ti. 1,.c. 2 4 4 , 5 14. [ A 5 7 4 - 9 3 ] . Judymenl:

' t o t h a t e f f e c t WAS en t e red . [ A 5 9 4 - 9 5 ] . T h e r e a f t e r ,

t h e p l a i n L i f f s f i l .e d m ot io ns t o v a c a t e t h e judgment .

[ A 5 9 6 , 6371. The Land Court denj.ed t h e s e m o t i o n s a n d. ,

r e a f f i r m e d i t s p r i o r j u d q m e n t . [ A 1 1 3 6 ] .

The p r o p e r t i e s s e c u r i n g . t h e I b a n ez a n d LaR ace

m o rt ga ge s a r e l o c a t e d i n S p r i n g f i e l d , M a s s a c h u s e t t s .The p l a i n t i f f s f i l e d t h e i r n o t i c e s o f i n t e n t to

f o r e c l o s e i n t h e Bosto n G lobe, which t h e :l,a'nd Co urt

found was "a newspaper of g e n e ra l c i r c u l a t i o n " i n

, S p r i n g f i e l d . . : t ' h i s . i s s u e i s n o t r a i s e d by a ny p a r t y ona p p e a l . [ A 5 7 7 - 5 7 9 1



On October 30, 2009, plaintiffs filed notices of

appeal from t h e Land Court's orders and judgments

against them. [A1163-661.

On March 22, 2010, the Supreme Judicial Court

granted direct appellate review..

Statement of the Relevant F a c t s

The relevant facts were succinctly s e t forth in

th e 'Land Cour t ' s Memorandum and Order on P l a i n t i f f s '

Motions to Vacate Judgment. [A1136-1162]

The facts concerniny Lhe Ibanez and LaRace

mortgages are substantially similar. Both involved

adjustable-rate, subprime loans for the purchase of

residential property in Springfield. [ A l l 4 ' 1 1 . In

both, t h e borrower signed a promissory note arid gave a

mortgage to a lender, whi.ch was immediately recorded.

-Id. Rose Mortgage was the original lender far the

'Ibanezmor tgage and Option One Mort-gage Corporation

was the original lender for the LaRace mortgage. Id.

Rose endorsed the.Ibanez note and properly

assigned the mortgage t o Option One. -d. Option One

then.executed an endorsement of both promissory notes

in blank, makiny each "payable.to bearer" and

4



“ n e g o t i a t ed by t r a n s f e r a lo n e u n t i l s p e c i a l l y .

e n d o r s e d . ” -d . , c i t i n g G . L . c . 106, 5 3 - 2 0 5 ( b ) .

I n b o t h cas es , Opt ion One aJ.so e x e c u t e d a n .

a s s i g n m e n t o’f h e m o r t g a y c i n b l a n k (i.c.,... w i t h o u t a

s p e c i f i e d a s s i g n e e ) . - _ Id . T h e s e blank mortgage

a s s i g n m e n t s w e re n e v e r r e c o r d e d a n d were n o t l c g a l l y

r e c o r d a b l e because t he y f a i l e d to i d e n t i f y t h o

a s s i g n e e . S e e G . Id . c. 183 , 5 6C ( a s s i g n m e n t m u s t

i d e n t i f y t h e a s s i g n e e i f it is t o be r e c o r d e d ) .

S e c u r i t i z a t i o n.. o f t h e J b a n e z Mortgage, . .

A f t e r Opt ion One e nd or se d t h e n o t e s i n ’ b l a n k , i t

s o l d t h e m o r t g a g e s . [A1118]. 0 p t i . m O n c s o l d t h e

. I b an ez mor tgage t o Lekman Bro the . r s . -d . Lehman

B r o t h e r s t h e n s o l d t h e m o rt ga ge , t o g e t h e r w i t h

hundreds of o t h c r loans, t o S t r u c t u re d A s s e t

S e c u r i t j , e s C o r po r at j. o n (“SASC”) -d . SASC t h e n s o l d

t h e s e l o a n s t o t.he S t r u c t u r e d A s s e t Secu r i . t i e s

Corpora t j .on Mor tgage Loan T r u s t 2006 - 2 , of which

p l a i n t i f f U . S . . Bank N a t i o n a l A s s o c i a t i o n (“U.S. Bank”)

was t h e t . r u s t e e . I d ..-

A l l of t h e s u p p o r t i n g d o cu m en ts c o n c e r n i n g t h e

Ibanez mor tgage were p l a c e d i . n t o a , c o l l a t e r a l f i l e ”

and presumably were t r a n s f e r r e d b et we en t h e e n t i t i e s

5



I . i s t e d a b o v e as c a ch t r a n s a c t i o n was c o m p le te d:

[ A 1 1 4 Y l . T h i s c o l l a t e r a l f i l e c on ta in ed t h e o r i g i n a l

p r o m i s s o r y n o t e , t h e Hose M or tg a g e e n do r se m e nt o f t h e

p r o m i s s o r y n o t e t o O p ti o n O ne, O p t i o n One's b l a n k

endorscmcnt a f t h e p r o m i s s o r y . n o t e , t h e mo rt ga ge

i s s u e d Lo Rose Mor tgage , Lnc . , t h e a s s ignmen t of th e

morLgage from Rose t o Option One , and Op' t ion O n e ' s

b l a n k mortgage a s s i g n m e n t .

S e c u r i t i z a t i o n o f t h e - aRace Mortgage

...d.

Option One sold th e LaRace mortgage t o B a n k of

. A m e r i c a . -'d . Bank oFAmerica s o l d t h e LaKace

m o r tg a g e t o g e t h e r w i t h h u n d re d s o f o t h e r - l o a n s to

A s s e t B a c k e d F u n d i n g C o r p o r a t i o n ( "ABFC") . CA1149-

I l . S O ] . A BF C Lhcn s o l d t h o s e l o a n s t o t h e A B F C 2005-

OI''l'1 T r u s t , of w h i c h p l a l , n t i f fW e l l s

Fargo B a n k , N . A ; ,

( 'W ells Fargo") was t h e t r u s t e e . [A1150].

J u s t as w i t h . t h c I ha ne z m o rt ga ge , t h e e s s e n t i a l

l o a n do cu m en ts , i n c l u d i n g t h e LaRaces ' mor tgage and

o r i g i n a l promissory n o t e , O p t i o n O n e ' s . b l a n k

endorsement of t h e p r o m i s s o r y n o t e , a nd O p t i o n O n e 's

endorsement of t h e mortgage i n b l a n k , w e r e c o n t a i n e d

i n a " c o l l a t e r a l f i l e " t h a t was p r es u m ab l y p a s s e d f ro m

p a r t y t o p a r t y a s t h e l o a ns w e r e s o l d . I d .

6



The Forec losu re s .

A f t e r b o t h t..? I b a n e z and LaRace ian s became

d e l i n q u e n t , t h e f o r e c l o s u r e p r o c e s s be ga n. [ A 1 1 5 3 ] .

The l o a n s were r e f e r r e d t o c o un s el w i t h i n s t r u c t i o n s

t o b r i n g f o r e c l o s u r e a c t i o n s a g a i n s t t h e d e f en d an t s .

[A1153-541. T h e r e a f t e r , p l a i n t i f f s f i l e d

S e r v i c e m e b e r s C i v i l R e l i e f A c t c o m p l a i n t s a g a i n s t M r .

I h a n c z a nd t h e L a R a ce s. CA1154-551 .

The I b an e z c o m p l a i nt i d e n t i f i e d U . S . Rank as “ t h e

owner (or assignee). a n d h o l d e r o f a m o r t g a g e w i t h a

s t a t u t o r y pow er o f s a l e . ” [ A1 15 4] . Thc N o t i c e o f

Mor tgagee ‘ s Sa le of R e a l E s t a t e was p u b l i s h e d . x.T h is N o t ic e s t a t e d t h a t U.S. Bank was t h e “ p r e s e n t

holder ‘ : o f t h e Ibanez mor tgage . -d. T h e I b a n e z

F o r e c l o s u r e s a l e was c o n d u c t e d on J u l y 5., 2007 . i n t h e

name o f U . . S . Rank. On Septcmher 2 , 2008 , some

. ’ The Servicemembers C i v i l R e l i e f A c t ,o f 2003 , f o r m e r l y

known a s t h e S o l d ie r s ’ and S aj.Z ors‘ C i v i l R e l i e f A c t

of 1.940, i s a f e d e r a l law t h a t p r ov i de s p r o t e c t i o n s

f o r m i l i t a r y m embers w h i l e t h e y a r e on a c t i v e d u t y .

50 U . S . C . app. §§ 501-596. P u r s u a n t t o t h i s A c t , a

f o r e c l o s i n g p a r t y m u s t o b t a i n a j u d i c i a l r u l i n g t h a t

t h e b o r r o w e r i s n o t o n a c t i v e m i l i t a r y s e r v i c e p r i o rt o f o r ec l o su r e . G . Because Massachusetts.is a non-

j u d i c i a l f o re c lo s u r e j u r i s d i c t i o n , t h i s i s t h e extentof court i nv ol ve m en t i n a t y p i c a l f o r e c l o s u r e i n t h e

Commonwealth.



f o ur te e n . m o nt h s a f t e r t h e ' f o r e c l o s u r e s a l e , Ameci.can

Home Mortynge Servicing, Inc. ( t h c p u r p o r t e d s i ic c es so r

i n i n t e r e s t t o 0 ptj .on One) a s s ig n e d t h e I b a n e z

mor tgage t o U . S . Bank. [ A 1 , 1 5 5 1 .

The LaR ace c o m p l .a i nt i d e n t i f i e d W e l l s Fargo a s

t h e "owner (or a s s i. g n e e) an d h o l d e r ' o f a mortgage w i t h

a s t a t u t o r y pow er o f salc." 1.d. The Notice of

M o r t g a ge e r s S a l e of R e a l E s t a t e was p u b li s he d . ' I d .

The N o t ic e s t a t e d t h a t W el ls Fargo was t h e " p r e s e n t

h o l d e r " o f t h e m o r tg a ge . -d'. 'The LaRace f o r e c l o s u r e

sale t o o k p l a c e o n J u l y 5, 2 0 0 7 in t h e name o f WeJ.1.s

k'arqo. 011 September , 2 , 2 0 0 8 , some f o u r t e e n m o n t h s

a f t e r t h c f o r e c l o s u r e s a l e , A m e ri ca n Home M o rt ga ge

S e r v i c i n g , I n c . ( t h e p u r p o r t c d s u c c e s s o r i .n i n t e r e s t :

t u Opt io n One) a s s iy nc d th e LaRace mor tgage t o 'Wells

F a r g o . ' r A 1 1 . 5 6 1 .

Summary of the Argument

The Land Court was corrccl . t o i n va l - i d a t e t h e

f o r e c l o s u r e s . n two d i s t i n c t g r o u n d s .

F i r s t , t h e p l a i n t i f f s 1.acked t h e l e g a l a u t h o r i t y

t o c on du ct t h e f o r e c l o s u r e s b e ca u se t h e y w ere n o t

among t h e p a r t i e s a u t h o r i z ed t o d o s o under e i t h e r t h e

s t a t u t o r y power of s a l e or under G : L . c . 2 4 4 , § 1 4 .

8



Second, even if the pl.ai.ntiffs ad had the l e g a l

authority to foreclose (which they did not) the

foreclosures would still have been i.nva1i.d because the

n0tice.s issued by the plaintiffs failed to name the

present holder of the mortgage as 'required under:G . Ti.

c . 244, 5 14.. ,

!Co foreclose on a mortgage securing property in

the Commonwealth, one must be the holder of the

mortgage. To be the holder of the mortgage, one must

be the original mortgagee or bc the assignee under a

valid assignment of the mortgage. It is' ot

sufficient to possess the mortgagor's promissory note.

The Land Court correctly held that the plaintiffs,

U.S. Bank and Wells Fargo were not holders. f the

l b a n e z and LaRace mortgages at the time o f foreclosure

because they were not assignees of valid assi9nment.s

of the mortgages. Without valid assignments, the

pl.ai.ntiffs lacked the legal authorityto foreclose the

mortgages'. T h i s , without more, is sufficient grounds

on which to invalidate the foreclosures and theLand

Court was correct to do so.

. ..

In addition, the foreclosures were properly

invalidated for the plaintiffs' failureto comply-with

9



the notice requirements set forthin'G. L. c. 244,

S 14. Chapter.244, 5 14 une'quivocally requires that

the foreclosure notice must identify the present

holder of the mortgage at the time of foreclosure.

The plaintiffs' notices falsely identified the

plaintiffs as the present holders of the Ibanez and

LaRace mortgages.. Without valid assignments of the

mortgage. s o f the time of foreclosure, the plaintiffs

were not in f a c t the holders of the mortgage.

each notice is fatally deficient a n d the Land Court

T h u s ,

correctly invalidated. he foreclasurcs.

Plaintiffs' claims that the Land Court's ruling

w i l l cause widespread confusion or significant cost to

innocent parties are greatly exaggerated, and such

reasoningdoes n o t w a r r a n t

ignoring thep l a i n

requirements of the law designed to protect

Massachusetts consumers. Indeed, itis t h e

foreclosing entities themselves who will bear the

greatest. ost of clearing title from their invalid

. .

foreclosures. Having profited greatly from practices

regarding .the assignment and securitization of

mortgages not grounded in the law, it is reasonable

10



f o r them to bear the cost of failing to enslire that,

such practices conformed to Massachusetts law.

Argument

P l a i n t i f f s had no legal a u t h o r i t y t o f o r e c l o s ebecause t h e y were n o t t h e orig inal mortgagees ,

were not authorized by the power of sale, and

. . because they lacked v a l i d ass.ignrnents of the

Ibanez and LaRace mortgages.

It j.s axiomatic that a party cannot foreclose a

I.

.mortgage without t h e legal authority to do so. To

have lcyal authority to foreclose, one must be

authorized by the power of sale set forth in the

mortgage and must be liskcd among the authorized

p e r s o n s in G . L. c. 244, 5 3.4. In this case, only the

mortgagee or its valid. assignee has that authority.

As the Land Court found, neither U.S. Bank nor Wells

' Fa rgo was the mortyigcc of the respective J-oans at the

time they sought to f'orecloseas the mortyagees, nor

was either the assignee under a valid assignment. of

the mortgage at the time of foreclosure. Accordingly,

neither U.S. Ban k nor Wells Fargo had the legal

authority to foreclose the Ibanez and LaRace

mortgages.

Chapter 2 4 4 , .'3 14 identifies a narrow group of

persons who may foreclose. That group includes the



mor tgagee , a p e r s o n . a u t h o r i z e d by t h e p ower o f sale,

a n a t t o r n e y d u l y a u t h o r i z e d by a w r i t i n g u n d er s e d ,

t h e m o rt ya ge c” s l e g a l g u a r d i a n ox c o n s e r v a t o r , o r a

p e rs o n a c t i n g i n t h e n a m e of s u ch m o rt g ag e e o r p e r s o n .

S e e G . L . c . 2 4 4 , 5 14.~

The s t a t u t o r y power of s a l e i n c o rp o r a te d by

re fe rence i n t o t h e l ha ne z a n d LaRace mor tgages i s

c o d i f j .e d a t G . L . c . 183 , § 2 1 , and s t a t e s t h a t o n l y

“ t h e m o rt ga ge e o r h i s e x e c ut o r s , a d m i n i s t r a t o r s ,

s u c c e s s o r s o r a s s i g n s ” may e x e r c i s e t h e power of s a l e .

G.. I,. C. 183, § 2 1 .

T he se a r e n o t mere g u i d e l i n e s or s u g y c s t c d

p r a c t i c e s . S t r i c t c o m p li a nc e w i t h t h e r e q u i r e m e n t s of

b o t h t h e p ow er of s a l e and G . L. c . 244, 5 1 4 i s

r e q u i r e d . M o o r e v .~

D i c k , 1 8 7 Mass. 207 , 213.-23.2

(1905); Rot tomly v . Kabachn ick , 13 Mass. App. C t . . 4 8 0 ,

4 0 4 ( 1 9 8 2 ) . See a1.so McGreevey v. Ck ar lc s tow n Fi ve

Ce’nLs, Sav. B a n k , 294 Mass. 480, 481 (1936)

( f o r e c l o s u r e s a l e i n v a l i d w here power o f . s a l e r e q u i r e d

a d v e r t i s e m e n t i n S u f f o l k C ou nt y a nd s a l e i n B os to n,

b u t m o rt ga ge e a d v e r t i s e d and s o l d i n Medford, where.

p r o p e r t y was l o c a t e d ) ; “11oche v. Farnswor th , 1 0 6 Mass.

509, 513 (1871).

-~

1 2



Thus , t o have l e g a l a u t h o r i t y to f o r e c l o s e ,

p l a i n t i f f s m ust e i t h e r be t h e m ortgayces of t h e

r e s p e c t i v e l o a n s o r h o l d v a l i d a s s ig n m e nt s o f t h e

l o a n s .

p e r s o n s a u t h o r i z e d by t h e s t a t u t o r y power of s a l e a t ,

t h e t im e of t h e f o r e c l o s u r e s , and b ec au se t h e y w ere

n o t v a l i d , a s s i g n c e s of t h e m o r tg a ge s , t h e y l a c k e d t h e

B ecause p l a i n t i f f s were n e i t h e r m o r tg ag ee s n o r

l e g a l a u t h o r i t y t o f o r ec l o s e , and t h e f o r ec l o su r e s a r e

v o i d a s a m a t t e r of law. 3

A . Plaintiffs a r e not the mortgagees of . t h e . .

Ibanez or LaRace loans.

T o b e a mortgagee , one mus t e i . t he r be t h e

o r i g i n a l l e n d e r o r b e t h e a s s i g n e e u nd cr a v a l i d

a s s i g n m e n t o f t h e m o r t g a g e . A p a r t y who i s n o t t h e

o r i g i n a l l e n d e r can o n l y o b t a i n t h e lega l . r i g h t s of a

m0r tqage . e th rough Lhe v a l i d a s s iqnmen t o f t h e

m o r t g a g e . N e i t h e r U.$. Bank 1101' Wells Fargo was th e

o r i g i n a l l e n d e r of t h o r e s p e c t i v e l o a n s . N o r w a s

P l a i n t i f f s do n o t e ven a rg u e t h a t t h e y a r e

" s u c c e s s o r s " o r ' h a t t h e y " a c t ' i n t h e name o f " t h e

m o rt ga ge e, an d r i g h t f u l l y s o . N e i t h e r U.S. B a n k n o r

W e l l s ' F a r q o h ad , a t t h e t i m e o f f o r e c l o s u r e , a c q u i r e d

t h e a s s e t s o r l i a b i l i t i e s o f t h e h o l de r of t h emor tgages . Nor c o u l d U.S. Bank o r Wells Fargo

p l a u s i b l y c o n t e n d t h a t t h e y were a c t i n g " i n . t h e name

o f" t h e h o l d er of t h e m o r t g a g e s , p a r t i . c u l a r l y w h e r e

t h e f o r e c l o s u r e no . t ic es i d e n t i f y t h e p l a i n t i f f s acLirig

i n t h e i r own c a p a c i t y a s t h e f o r e c l o s i n g p a r t i e s .

13



e i , t h e r p l a i n t i f f an . a s s i g n e e u n d e r a v a l i d a s s i gn m en t

b e c a u s e , a t t h e L i m e of t h e f o r e c l o s u r es , n e i t h e r U.S.

Bank nor Wells Facgo h e l d a w r i t t e n s t a t e m e n t

c o n v e yi n g t h e m o rt g ag e t h a t s a t i s f i e d t h e S t a t u ' t e o f

Frauds o r e ve n t h e m o st b a s i c of c o n t r a c t u a l

r e q u i r e m e n t s . S e e L i n s k y v ; _.xch. qe T r u s t C o . , 26 0

Mass. 1 5 ( 1 9 2 7 ) (agreement t o g i v e o r a s s i g n a m o rt g aq e

i s an agreement t o convey an i n t e r e s t i n l a n d and must

b e w r i t t e n ) ; Warden."" v. Adams, 15 Mass. 233 ( 1 8 1 8 )

( same) .

111 M a s s a c h u s e t t s , "[a] mortyage of r e a l e s t a t e i s

a conveyance of t h e t i t l e o r of some i n t e r e s t ' t h er e .i .n

d c f e a s i b l e upon t h e paym ent 0.f money o r t h e

pe r fo rmance of some o.Lhcr c o n d it i o n ." Murphy v.

Cha r le s town Sav . ,.B a n k. .,- 380 Mass. 7.30, 7 4 7 ( 1 9 8 0 ) . I n

a m oct qa ge t r a n s a c t i o n , t h e m o rt ga go r t r a n s f e r s all

l e y 2 1 t i t l e t o t h e m o rt ga ge e, r c L a i n i n g o n l y t h e

" e q u i t y o f r e d em p t io n , " u n t i l t h e m o rt ga ge i

s a t i s f i e d 'o r f o r e c l o s e d . . ~S e e P e r r y v. M i l l e r , 330

Mass. 2 6 1 ( 1 9 5 3 ) ; Hanna v. Town o f Framingham,- 6'0

Mass. App. C t . 4 2 0 (20011) ; At lan t i c-- Sav. Bank v.

M e t r o p o l i t a n B a n k_..ll.- & T r u s t , 9 Mass. App. C t . 286

(1980). A c c o r d i n g l y , t h e a s s i g n m e n t o f a mor tgage is a

14



conveyance of a.lega1 estate in the mortgaged

premises. It j.s the transfer of an j.nEere:st n real

property and the Statute o f Frauds requires that any

assignment of the mortgage be in writing. Warden v.

Adams, 15 Mass. 233 (1018).

To convey real p r o p e r t y one must have a written

agreement that contains the fundamental elements ofa

contract and complies with the Statute of Frauds. ~See

.G.L. c. '259,5.1; i n s k y v. Exchange,- - Trust Co., 260

Mass. 15'(%327)(agreement to give or assigna mortynye

is an agreement to convey a n interest in larid and must.

be wr.it'c.cn); prague v. Kimball, 213 Mass. 380 (1913):The written instrument "must contain the termso f the

contract agreed upon - t h e parties, the locus (if an

i-nterest in real estate is dealt with), in some

circumstances the price, and it must be signed by t-he

party to be charged or by someone authorized tu s i i g r i

on his behalf." Cousbelus v. Alexander, 315 Mass729,

./30 (1944) (internal quotations. mitted). An

assignment that does not contain these essential

components is invalid. ISee id.' T hus , to be the

holder of a valid assignmentof a mortgage, one must

hold a written agreement that includes,at: a minimum,

15



t h e n a m e s o f a l l p a r t i e s t o t h e c o n t - c a c t a n d a n

i d e n t i f i c a t i o n of t h e s u b j e c t p r o p e r t y , and i s s i g n e d

b y t h e p a r t y t o be cha rged . A t no t i m e p r i o r t o t h e

f o r e c l o s u r e s d i d p l a i n t i f f s possess such a n . .

a s s i g n m e n t .

. .

Th e r e c o r d . r e v e a l s t h a t n c j t h e r U:S: Bank n o r

Wells F a r g o h a d r e c e i v e d a f u l l y - e x e c u t e d a s s i g n m e n t

p r i o r t o t h e f o r ec l o su r e s a l e s . ’ A t most , e a c h

p o s s e s s e d t h e a s s i g n m e n t s executed i. n bla nk b y Opt ion

One p r i o r t o t h e s e c u r i t < . z a t i o n o f t h e l o a n s . N e i t h e r

of t h e s e a s s i g n m e n t s i d e n t i . . f i e d a n a s s i g n e e .

Indeed , n e i t h e r p1. ai .n ti .f f i s i d e n t i f i c d on t h e s e

p u r p o r t e d “ a s s i g n m e n t s . ” Nowhere on t h e s e d o c u m e n t s

do t h e w ords “U.S. Bank” o r “Wells Fargo“ appea r .

Unde r Massachuse t t s l aw , s u ch “ a s s i g n m e n t s i n b l a n k ”

t r a n s f e r n o t hi n g t o no o ne . See t.’l.avin v . M o r r i s s e y ,

327 Mass. 2 1 7 , . 2 1 9 (1951.) ; Macurd2 v . F u l l c r ,... .... . 225

Mass. 3 4 1 , 344-45 (1916). Thus, a t t h e t i m e t h e y

p u r p o r t e d t o f o r e c l o s e , n e i t h e r p1 .a in ti .f f was t h e

mor tgagee of t h e r e s p e c t i , v e l o a n s .

B. Neither p l a i n t i f f was authorized by t h e

power of sale in the respective mortgages.

Ne i the r . .U .S . Bank no r Wells E’acgo i.s among thosc

p a r t i e s a u th o r i z ed t o e x e r c i s e t h e s t a t u t o r y power o f

16



sale incorporated into the Ibanez and' aRacc

mortgages. The only persons w h o may exercjse the

power of s a ' l e are "the mortgagee or his executors,

administrators, successors OK assigns." G.. . c. 103,

5 21. Because neither plaintiff is a mortgayeen o r

was either an assignee under a valid assignment at: the

time they foreclosed and sold t h e properties, each

l a c k e d authori.tyto exerci-se he power of sale.

C. The assor ted securitization documents do not

establish o x comprise valid assignments.

Plaintiffs contend that various securitization

documents constructj.ve1.y assigned to themthe I ba ne z

and LaRace mortgages. Specifically, the plaintiffs

contend that ' the Ibamz mortgaqe was assj-gnedto U.S.

Hank by way of a Trust Ayreemcnt tha.tr is not part of

the record, but is purportedly evidenced by a Private

Placement Mmnurandum. They contend thatWells Fargo

received t h e LaKace mortgage via a ' P u r c h a s e and Sa1.e

Agreement. In each case, plaintiffs' argument.is.

without merit.

1. The LaHace Securitization Documents.-

As the Land Court found, the LaRaces gave a

mortgage to Option One when the loan was initially

made. Thereafter, Option One executed an assignment

3. I



of the mortgage "in blank," ~i.e., without naming the

party to whom the mortgage was to be a s s i g n e d . As'

detailed above and by the Land Court, this "assignment

I,n 'blank" was ineffective to transfer any interesti n

the mortgaycl.

Wells Fargo contends that the LaRace mortgage was

assigned to it by the Pooling 'and Servicing Agreement

it entered i . n to with Asset Backed Funding Corporation

("ABFC") This ayreement purports to transfer and

assign all of the rights o f ABFC to Wells Fargo.

However, thcrc is nothj g in the .record that indicates

that ABFC had any interest in the LaRace mortgage.

Thus, even if he languagc in the P o o l j . n g and

Servicing agreement was sufficient to transfer all of

A B F C ' s interests in the LaRace mortqage, the

assignment would be'ineffective because ABFC had nd

int-erest n the La'dace mortga- ..o,... -- Lransfer.

2. The Ibancz_ ~.-.ecuritization. Uocuments.

The .only valid assi.qnmentof .the Ibanez mortgage

p r i o r to the foreclosure sale was the assignment from

R o s e Mortgage, Inc. to Option One. There i . s no

evtdence that anyone else, much 1.es.r.S.. Bank,

acquired the Ibanez mortgage before foreclosure.

18



. Indeed, t h e r e a r e o n l y two v a l i d a s s i gn m e n ts o f t h e

Ibar lez .mor tgage j , n t h e r e c o r d : Rose Mor tgage ' s

a s s i g n m e n t t o O p t i o n One and American Home Mortgages

S e r v i c i n q , Inc. s p o s t - f o r e c l o s u r e a s s i g n m e n t t o U. S .

' .

Bank.

U . S . Bank cl.a.ims i t becamc t h e h o l d e r of ' t h e

I b a n cz m o r t g aj e v i a a n u n d i s c l o s e d ' I ' r u s t Agreement

1J.S. Hank sta.Les t h a t t . h i . s document . : which was n e v e r

p roduced and i s n o t i.n t h e r e c o r d ... c o n t a i n s l an gu ag e

s i m i l a r t o t h e j .anguage i n t h e LaRace I?oolj .ng and

S e r v i c i n g A gree me nt. P l a i n t i f f s ' Hr. a t 1 9 .

1I.S. B a n k ' s rel i .ance on t h i s document i s

misp laced . Even i F t h e Trus t Agreement were i n t h e

r e c o r d a n d e v e n i.f i t co r i l a ined l anguage i .denti.cal t o

t h a t i n t h e LaRace Pool in g and Se rv ic in g Ayreemcnt,it

wou1,d s t i l l ,bc i n e r f e c t i v e t o a s s i g n t h c Ibanez

Inor'tyage hecause t t i c r c i s no evj.r lence t h a t t h e p a r t y

w h o s e i . n t e r e s t i n t h e m o rt ga ge i t purports t o t r a n s f e r

had a n y i n t e r e s t j n k h a t murlyage. .

The T r u s t Aqreenicnt a1legedl.y p u r p or t s t o

t r a n s f e r t h e i n t e r e s t s of S t ru c tu r ed A s s e t S e c u r i t i e s

C o r p o r a t i o n ("SASC") t o U.S. Bank a s t r u s t e e o f t h e

S L r u c t u r e d A s s e t Securi t ies Corpora t ion Mor tgage Loan



T r u s t 2006 - 2 . '

owned by Option One, much ' l ess t h e I b a n e z m o r t g a g e .

T h e r e i s no e v i d e n c e of any ass i .gnmcnt f rom Option One

t o SASC. Thus, even i f : t h e Trus t Agreemen t were

I t does n o t p u r p o r t t o ' a s s i g n a ny th in g

e f f e c t i v e t o a s s i g n e ve ry i n t e r e s t S A X had i n t h e

Iba r iez l o a n i t wou1.d s t i l l be i n e f f e c t i v e b ec au se t h e

I b a n e z . oa n was nev er SASC'r; t o t r a n s f e r . 4

Thus, t h e L and C o u rt c o r r e c t 1 . y f ou n d t h a t t h e

p l a i n t i f f s foreclosed on M r . Ibanez and t h e LaRaces

w i t h o u t l e g a l a u L h o r i t y u n d e r e i t h e r G . L . c . 2 4 4 ,

5 1 4 o r t h e s t a t u t o r y power o f s a l e i n c o rp o r a te d by

r e f e r e n c e i n t o t h e m o r tg a ge s .

11. Not only did plaintiffs lack l e g a l authority to

foreclose, b u t the foreclosures are invalidbecause t h e notices published prior to

foreclosure are fatally deficient.

'Even if t h e p l a i n t i f f s had l e g a l a u t h o r i t y t o

e x e r c i s e t h c s L a t u to r y p n w e r of sale ( w h i c h t h e y d i d

n o t ) , th e f o r e c l o s u r e s w o u l d n o n . e t h e l e s s b e . i n v a l i d

b c c a u s e % h e n o t i c c s - of s a l e ' i s s u e d f a i l e d t o i d e n t i - f y

.."_I

I n dc c d, t h e v e r y f a c t t h a t b o t h p l a i n t i f f s s o u gh t

comple ted a s . s ignmen ts f rom O p ti on One a f t e r t h e

f o r c c l o s u r e s occurred c o n fi r m s t h a t t h e y t h em s e lv e s

b e l i e v e d t h a t t h e y l a ck ed v a l i d a s s i gn m en ts p r i o r t o

t h a t t i m e .

4

2 0

. . . -.



t h e " p r e s e n t h o l d e r" of t h e Ibanez and I jaRace

mor tgages .

A . G . L . c . 2 4 4 , § 14 requires t h a t t h e n o t i c e

i d e n t i f y th e "pre sent holder"' o f t h e

mortgage.

C h a p t e r 2 4 4 , s e c t i o n 1 4 " p r e s c r i b e s t h e p r oc e du r e

i n t h e f o r e c l o s u r e of a mortgage of r e a l e s t a t e under

a p ow er of s a l e , an d s e t s f o r t h t h e fozm o f t h e n o t i c e

and t h e r e q u i r e m e n t s f o r i t s p u b l i c a t i o n . " M i l t o n

Sav. Hank v . U n i t e d S t a t e s , 3 4 5 Mass. 302, 306-30 '7

(1963). S e e a l s o S t a t e s Res rccs Corp. v . ___h c

A r c h i t e c t u r a l, ....-I.-" T e a m , I n c . , 433 F.3d 73, 80-83 ( 1 s t C i r .

200 5 ( m or tg a ge s t a t u t e s s e t minimum s t a n d a r d ) .

C h a p t e r 2 4 4 , s e c t i o n 14 s p e c i f i c s , - the

~ ~- "_

r equ remcnts f o r t h c n o t i c e t o be i s s u e d i n

c o n j u n c t i o n w i t h a fo r ec l . o su re . Sec t i - on 3.4 j . 'ncludes

t h e t e x t o f a form n o t i c e . ' T h a t fo rm s p e c i f i c a l l y

states tha t : thc "p re s en t ho lde r' ' o f t h e m o r t g a g e s h a l l

b e i d e n t i f i e d and in de ed , t h a t the p r e s e n t holder:

s h a l l s i g n t h e n o t i c e . G . L . c . 2 .44 , 5 14. T h c .

s t a t u L e s t a t e s t h a t t h i s form , w hich i s e x p l i c i t l y

p a r t o f t h e t e x t o f. S e c t io n 1 4 , " s h a l l be a s u f f i c i e n t

N o t i c e o f t h e sale." I d . ( e m p h a si s a d de d ) -

21



This Court has long required that anyone

purporting to act unde r a statutory power of sale

must strictly comply with the terms ofG. L.

c . 244 , 5 14 and the power of sale:

It is familiar law that one who sells

under a power must follow strictly its

terms. If he fails to do so there isno valid execution o f the power and th6

sale is wholly void.

Moore, ' 187 Mass. at 211-212 (citations omit.ted). See

also McGreevey, 294 Mass. at 481; Roche,.106Mass. at

513; Bottomly, 1 3 ass. ~ p p . t. at 484 ("The manner

in which the not'iccof the proposed sale shall be

given i s . o n e of the important terms of the power and a

stricl: compliance with it j.s essential, to f h e valid

exercise of the power. )

Thus, even though Section 14 permits the u se of

vari.ati.ons n the statutory farm, any such variation

must include, at a minimum, the criteria specj-fied in

the statutory form, including a specific

'identificationof the present holder of the mortgage

at the t h e of the notice. Bottomly,. . I 13 Mass. A p p .

Ct. at 483-484. Tho failure to identify the present

holder of the mortgage in the notice will render a

forec.losuse voi,das matter of law. Id.

2 2



B . P l a i n t i f f s ' f a l s e i d e n t i f i c a t i o n o f

themselves as the "present h o l d e r s " i n t h e i r

f o r e c lo s u r e n o t i c e s renders t h e n o t i c e s

fatally d e f i c i e n t .

Because t h e p l a i n t i f f s were n o t t h e p r e s en t

h o l d e r s of t h e m o r t g a g e s a t t h e t i m e t h e y f o r e c l o s e d

on t h e Ibanez and LaRacc l o a n s , t h e n o t i c e s were

f a t a l l y d e f i c i e n t and t h e f o r e c l o s u re s v o id a s a

m a t t e r o f l a w .

1 . L i s u n di sp u te d t h a t t h e f o r e c l o s u r e n o t i c e s f o r

t h e Ibanez and LaRace f o r e c l ~ o s u r e swere p u b l i s h e d in .

the names of.U.3. R a n k ' an d . W e l ls F ar go , r e s p e c t i v e l y .

[ A 4 8 4 , 4 8 6 1 . M oreover, t h e r e c o rd e s t a b l i s h e s t h a t

n e i t h e r had any i n t e r e s t i n t h e m o rt ga ge b e i n g

f o r e c l o s e d. a t t h e t i m e of t h e f o r e c l o s u r e . [A18, A231

I t i.s also u n di sp u te d t h a t n e it he r : p l a i n t i f f was. .

Lhe o r i g i n a l m o rt ga ge e o f t h e r e s p e c t i v e l o a n s . -d .

T hu s, t o b e h o l d e r s o f t h e m ortgages , t h e p l a i n t i f f s

need t o e s t a b l i s h t h a t t h e y r e c e i v e d v a l i d a ss ig n m e nt s

from a v a l i d h o l d e r of t h e mortgage: A t t h e t h e o f

t h e f o r ec l o su r e s , t h e p l a i n t i f f s had n o t r e c e i v e d any

such a s si g nm e n t ( s e e S e c t i o n I , supra.). I n d e e d , t h e

p l a i n t i f f s o n l y r e c e i v e d c om p le te d a s si g nm e n ts s e v e r a l

m o n t h s a f t e r t h e f o r e c l o s u r e s a l e s took p l a c e . a.

A cc or di ng iy , p l a i n t i f f s were n o t t h e p r e s e n t h o ld e rs

2 3



of the mortgages and thus their foreclosure notices

were fatally deficient rendering the foreclosures void

as a matter o € law.

111. Plaintiffs’ argument that they held t h e mortgages

notwithstanding the lack of valid, written

assignments as of the date of the foreclosures is

unsupported by law.

Plaintiffs‘ contention they are the “equitable“

holders of thc mortgages and that they hold enough 0.f

the “indicia of ownership”to he considered mortgagees

of the LaRace and’Ibxiez loans is riot only

insufficient to grant them the -legal authorityto

, .

foreclose, but also insuff%cient to grant them

“present holder” status.

This argument runs counter to the’ longstanding

requirement that: foreclosure under a statutory power

of sale must be in strict compliance with all aspects

of the statute. --oore, 187 Mass. at 211-21.2;

--Bott*, 13 Mass. App. Ct. at 484. ~See also

...McGreevey,. 294 Mass. at 481; .oche, 106 Mass. at 513.

The need for strict compliance is especially true

I.n Massachusetts where no judicial approval is

required to foreclose. In the absenceo f judicial

foreclosure, strict compliance is the only means to

ensure that borrowers are not subject to fraudulentor

24



i m pr op er f o r e c l o s u r e s . I n d e e d , ' a s t h e Land C o ur t

c o r r e c t l y noted, s t r i c t compliarice w i t h t h e s t a t u t o r y

r e q u i r e m e n t s f o r t h e e x e r c i s c o f a power of s a l e i s

t h e only way Lo e n su r e t h e p r o t e c t i o n s g iv en t o

homeowners an d borro we rs by t h e L e g i s l a t u r e .

D i s t r e s s e d h om eow ners o f t e n face c h a l l e n g e s i n

t .he f o r e c l o s u r e p ro c e s s. In. c ' r t a i n c a s e s , t h e y may

l a c k t.he t e c h n i c a l , k no wle dg e a nd t h e f i n a n c i a l

r e s o u r c e s t o c o n t e s t a w r o n g f u l . f o r e c l o s u r e o r

o t h e rw i s e e n su r e t h a t t h e l e n d e r a d h er e s t o t h e

o b l i g a t i o n t o s e r ve t h e i n t e r e s t s o f t h e mor tgagor i n

5good f a i t h . Thus, p l a i n t i f f s ' i m p l i c a t i o n t h a t t h e

borrowers have wai.ved Chc i r r i g h t t o c h a l l e n g e t h e

l e g i t i m a c y o f t h e s a l e b ec au se t h e y had "amp1.e

o p p o r t u n i t y t o c h a l l e n g e t h e f o r e c l o s u r e p r oc c ed i ng s

p r i o r t o t h e s a l e s b u t f a i l e d t o do so" i s

p a r t i c u l a r l y t r o u b l i n g when t h e p l a i n t i , ' f f s t he m se lv es

5 T h a t . a f o r e c 1 , o s in g p a r t y o w e s . s u c h a d u t y t o t h e

mor tgagor i s w e l l - e s t a b l i s h e d . See S e p p a l a & Aho

~.onstr. C o . v . Pe te r sen , 373 Mass. 3 1 6 , ' 320 ( 1 9 7 7 )

("We have f r e q u & t ly s t a t e d t h a t t h e b a s i c r u l e of law

a p p l i c a b l e to . t h e f o r e c l o s u r e of r e a l e s t a t e m or tg ag es

i s t h a t a mortgagee i n e x e r c i s i n g a pow er o f s a l e i n am o rt ga ge mu st a c t i n good f a i t h a n d m ust user ea so na bl e d i l i g e n c e t o p r o t e c t t h e i n t e r e s t of t h e

mor tgagor . ")

2 5



even those who originated Loans but assigned t h e m to a

successor, mortgage l o a n s becanc the assets used in

asset-backed securities. The mortgages nominal.Sy

changed hands,many times but written assignments were

not employed. These transfers arguably have 1 1 0

practical impact until a.loan ef-sulks and foreclosure

is the creditor's preferred coursc of action. At that

point, the securitization regimewas required t n

conform to state law prior to foreclosing- to ensure

simply that legal. ownership "caught. p" in order that

the creditor foreclose legally in Massachusetts. The

lenders,. . trustees and service,rs ou1.dhave done this',

but apparently elected not to, p e r h a p s on a massive

scale.

unambiguous, a's discussed ,supra. Esp.cciallyin the

inherently legal areria oE establishing, transferring

and exercising security interests in land, Plaintiffs

should not be excused for'their a i l u r e Lo ensure that

B u t the requirements were well-known and

their business practices conformed to Massachusetts

law.

IV. There are no grounds on which to l i m i t the L an d

Court' s ,decisionto future cases.

Plaintiffs xequest that, if t h e Land C o u r t ' s

decision is upheld, this Court 1irnj.t its 'applj.cati.on

2 1



o n l y t o f u t u r e f o r e c l o s u r e s . T h i s a rg um en t j.s w i t h o u t

a ny b a s i s i.n law and s h o u l d be r e j e c t e d .

N o t w it h st a nd i ng t h e " i n d u s t r y p r a c t i c e " of

s u bp r im e l e n d e r s a nd o t h e r s who c r e a t e d m or tg ag e-

backed s e c u r i t i e s , t h e s t a t u t o r y r eq ui re me nt s a t . i s s u e

i.n t h i s case a r c l o n g - s e t t l e d . The n o t i c e

r e q u i r e m e n t s o f G . L. c . 244, 5 1 4 have been i n p l a c e '

f u r more t h a n f i f t y y e a r s a nd we re c on f ir m e d by t h e

Appeals C o u r t i n . 1 9 0 2 . S e e B o t to m l y, 1 3 Mass. App. a t

4 8 4 . The Land C o u r t ' s r u l i r i y w a s . n o t a " j . u d i c i a l l y -

r e n d e r e d c h a n g e t o an e s t a b l i s h e d p r o p e r t y law" a s t h e

p l a i n t i f f s c la im . A p pe l l an ts ' B r . a t 49 . M O K e O V e I ,

t h e r e i s n o t , nor has Lhere ever b ee n, a d o c t r i n e ' t h a t

a n i - n t e r p r e t a t i o n of a l o ng - en a ct e d s t a t u t e c an b e

1 . i . m i t e d t o f u t u r c c a se s .

' P l a i n t i f f s claim t h a t t h e y a r e " i n n o c e n t "

p u r c h a s e r s be ca us e t h e y r e l i e d on REBA T i t l e S t a n d a r d

58 a nd c o r r es p o n d in g " i n d u s t r y p r a c t i c e " when, i n

f a c t , t h e y . w e r e a w a r e o f b a t h t h e s t a t u t 0 r . y

r eq u ir em e nt s and t h e d e f e c t s i n t h e i r own a s s i g n m e n t s

and n o n e t h e l e s s pr oc ee de d t o f o r e c l o s e . A s banks i n

t h e b u s i n es s o f m a k i n g l o a n s s e c u r e d b y m o r t g a g e s ,

s e l l i n g t h e s e s bc ur ed l o a n s , an d a t times f o r e c l o s i n g

. .

28



0 1 1 t h c sc mor tgages , plaintiffs were well aware of the

statutory requirements to transfer I.egal i-nterestsin

mortgages and t o c o n d u c t f u r e c l o s u r e sales.

Plaintiffs own c o n d u c t c o n f i r m s t h i s , f o r why e l s e

would t h e y s e e k a v a l i d , w r i t t e n as si gn m en t a f t e r t h e

f o r e c l o s u r e i f no't to cure the defective assignments

in blank they possessed beforehand?

Plaintiffs were aware t h a t t h e ass ignmen. ts were

I.egal1.y e f i c i e n t and were aware u f t h e r i s k s t h e y

a c c e p t e d in loreclosing without first complying with

t h e l e g a l requirements.

auction notwithstanding these risks.

They bought 'the properties at

As the Land Court points out, t h e hanks were the

only b i d d e rs a t t h e f o r ec l o s u r e s a l e s a n d t h e y

p u r c h a s e d thesc properties for less than the market

v a l u e s stated in their own appraisals, an advantage

they may have gained b ec au se o f t h e d e f e c t s in t h e i r

n o t i c e s . [A S 19 - 8 0 ] T h i s was particularly dhmagiriy t o

Mr..Ibanez, a s U.S. Bank b i d f o r a n d p u r c h a s e d t h e

L b a n e z p r o p e r t y fo r some $ 1 6 , 0 0 0 l c s s than Lhe amount

of t h e o u t s t a n d i n g loan, leaving a significant

deficiency. Id. Thus, the p l . a i n t i f f s profited from

the risks they took, at t h e e x p e n s e o f each o f t h e



burrowers. Having reaped th e bene fits .of their casual

attitude toward ensuring t , h e y possessed valid

assignments of the mortgages, it is n o t u n j u s t that

plaintiffs should now bear the costs of their errors.

Conclusion

For the r e a s ons s ta t -ed above, the Commonwealth

respect fully urges the Court to affirm the decision of

the Land Court.

Respectfully Submitted,

COMMONWEALTH OF MASSACHUSETTS

MARTHA COAKLEY

ATTORNEY GENERAL

Assistarit Attorney Ge n c r a l

Public Protecti.on and Advocacy .Bureau

Consumer Pro tectio n DivisionOnc Ashburton Place

B o s t o n , MA 02108

(617.) 727-2200 e x t . 2959j o h n . [email protected]. us

Dated:

September 20, 201.0

at Boston,. Massachusetts