Deutsche Bank National Trust Company, as Trustee of the IndyMac INDX Mortgage Loan Trust 2005-AR18, Mortgage Pass-Through Certificates, Series 2005-AR18 under the Pooling and Servicing Agreement dated Sept. 1, 2005 (Deutsche) filed its verified Complaint to Foreclose on the property of Eroilda P. Cicchelli (E. Cicchelli) and Ray Cicchelli (the Cicchellis)(10 MISC 423350) pursuant to the Servicemembers Civil Relief Act (the Servicemembers Act), along with Mortgagees Affidavit, on February 24, 2010, seeking a ruling that the Cicchellis are not in the military service. On September 23, 2010, Deutsche filed a Motion to Substitute Party, asking the court to strike Deutsche from its verified Complaint to Foreclose and substitute OneWest Bank, F.S.B. (OneWest), which this court (Scheier, C.J.) allowed. [Note 1], [Note 2]
On August 17, 2010, the Cicchellis filed their verified complaint against Deutsche and OneWest (10 MISC 436809), seeking a judgment that Deutsche and OneWest lack standing under the Servicemembers Act to obtain a judgment in that matter, and therefore could not conduct a valid foreclosure sale, as well as a preliminary and permanent injunction against the foreclosure sale. Along with their complaint, the Cicchellis filed an Application for Injunctive Relief, Emergency Motion for Temporary Restraining Order, supporting Affidavit of Counsel, Motion for Issuance of Memorandum of Lis Pendens, and Motion for Short Order of Notice. On August 24, 2010, there was a hearing on the Cicchellis Application for Preliminary Injunction, at which Deutsche and OneWest agreed to postpone the foreclosure sale until the Servicemembers Act case went to judgment. Because the issue involved in both OneWests Servicemembers Act case and the Cicchellis foreclosure case is the standing of OneWest to foreclose on the Cicchellis mortgage, this court consolidated 10 MISC. 423350 and 10 MISC 436809, per a Post Hearing Order issued on November 30, 2010.
On December 31, 2010, OneWest filed its Motion for Summary Judgment, along with Affidavit of Plaintiff. [Note 3], [Note 4] On January 20, 2011, the Cicchellis filed their Motion in Opposition to Summary Judgment. On February 22, 2011, OneWest filed its Response to Cicchellis Opposition to Summary Judgment. On March 25, 2011, the Cicchellis filed an Assented Motion to Allow the Cicchellis to File Response to OneWests Reply Brief, and on April 13, 2011, the Cicchellis filed their Response to OneWests Reply Brief. At that time the matter was taken under advisement.
Summary judgment is appropriate where there are no genuine issues of material fact and where the summary judgment record entitles the moving party to judgment as a matter of law. See Cassesso v. Commr of Corr., 390 Mass. 419 , 422 (1983); Cmty. Nat'l Bank v. Dawes, 369 Mass. 550 , 553 (1976); Mass. R. Civ. P. 56(c).
I find that the following material facts are not in dispute:
1. By deed recorded in Book 23635, page 239 at the Worcester County Registry of Deeds (the Registry), E. Cicchelli and Ray Cicchelli became owners of land at 32 Bancroft Avenue in Milford, Massachusetts (the Locus), with the buildings thereon situated on the Northerly side of Water Street and the Westerly side of Bancroft Avenue, bounded and described as follows:
EASTERLY by the Westerly side of Bancroft Avenue, 49.50 feet more or less;
NORTHERLY by land now or formerly of one Higgiston, 79.70 feet;
WESTERLY by land now or formerly of one Lee, 40.50 feet;
SOUTHERLY by the northerly side of said Water Street, 79 feet more or less. [Note 5]
2. On June 24, 2005, E. Cicchelli executed and delivered to IndyMac Bank, F.S.B. (IndyMac) a Promissory Note in the amount of $270, 501.00 (the Note).
3. In order to secure payment of the Note, the Cicchellis executed and delivered a Mortgage on Locus, dated June 24, 2005 and recorded at the Registry in Book 36722 at Page 316 (the Mortgage). The Mortgage states in part,
Borrower is Eroilda Paula Cicchelli and Ray Cicchelli MERS is a separate corporation that is acting solely as a nominee for Lender and Lenders successors and assigns. MERS is the mortgagee under this Security Instrument. ...
Lender is IndyMac Bank, F.S.B., a federally chartered savings bank Borrower does hereby mortgage, grant and convey to MERS (solely as nominee for Lender and Lenders successors and assigns) and to the successors and assigns of MERS, with power of sale, the following described property located in the County of Worcester which currently has the address of 32 Bancroft Avenue Milford, Massachusetts Borrower understands and agrees that MERS holds only legal title to the interests granted by Borrower in this Security Instrument, but MERS (as nominee for Lender and Lenders successors and assigns) has the right: to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property; and to take any action required of Lender including, but not limited to, releasing and canceling this Security Instrument. (emphasis in original).
4. On September 8, 2005, Deutsche acquired the Note as part of a securitized pool of accounts, specifically the IndyMac INDX Mortgage Loan Trust 2005-AR18, Mortgage Pass-Through Certificates, Series 2005-AR18, governed by a Pooling and Servicing Agreement dated September 1, 2005 (the PSA). The PSA defines IndyMac as the Seller and Master Servicer, IndyMac MBS, Inc. as the Depositor, and Deutsche as the Trustee. The PSA states, in relevant part,
The Seller, concurrently with the execution and delivery of this Agreement, hereby transfers to the Depositor, without recourse, all the interest of the Seller in each Mortgage Loan [Note 6]
The Depositor, concurrently with the execution and delivery of this Agreement hereby transfers to the Trustee for the benefit of the Certificateholders and the Certificate Insurer, without recourse, all the interest of the Depositor in the Trust Fund
In connection with the transfer and assignment of each Mortgage Loan, the Depositor has delivered the following documents or instruments with respect to each Mortgage Loan so assigned: (i) The original Mortgage Note, endorsed by manual or facsimile signature in blank
As promptly as practicable after any transfer of a Mortgage Loan under this Agreement, and in any event within thirty days after the transfer, the Trustee shall affix the Trustees name to each assignment of Mortgage, as its assignee [Note 7]
The Trustee acknowledges receipt of the documents identified in the Initial Certification in the form of Exhibit G-1, [Note 8] and declares that it holds and will hold such documents and that it holds or will hold such other assets as are included in the Trust Fund, in trust for the exclusive use and benefit of all present and future Certificateholders. The Trustee acknowledges that it will maintain possession of the related Mortgage Notes in the State of California, unless otherwise permitted by the Rating Agencies.
5. On July 11, 2008, IndyMac was closed by the Office of Thrift Supervision, and its assets were transferred to IndyMac Federal Bank with the FDIC as Conservator.
6. On April 6, 2009, Deutsche and OneWest signed a Limited Power of Attorney, which states in part that Deutsche
Pursuant to each of those certain agreements referenced on Exhibit A (the Agreement) hereby constitutes and appoints OneWest Bank, FSB as successor to Indymac Bank, B.S.B. in its capacity as servicer under each of the Agreements (the Servicer) This Appointment shall apply only to the following enumerated transactions 8. With respect to a Mortgage or Deed of Trust, the foreclosure ... cancellation or rescission of any such foreclosure, including, without limitation, any and all of the following acts: f. the preparation and execution of such other documents and performance of such other actions as maybe necessary under the terms of the Mortgage, Deed of Trust or state law to expeditiously complete said transactions .
Exhibit A of this Limited Power of Attorney lists the PSA.
7. By an Assignment of Mortgage dated May 14, 2009, MERS, as nominee for IndyMac, assigned the Mortgage to Deutsche and its successors and assigns (the Deutsche Assignment). [Note 9]
8. By an Assignment of Mortgage dated September 15, 2009, Deutsche assigned the Mortgage and the Note to OneWest and its successors and assigns (the OneWest Assignment). [Note 10]
9. On August 15, 2010, OneWest served the Cicchellis Notice of Intent to Foreclose and Notice of Deficiency. A foreclosure sale was scheduled for August 30, 2010. At the hearing for the Cicchellis Application for Preliminary Injunction, on August 24, 2010, OneWest agreed to postpone the foreclosure sale until the Servicemembers Act case went to judgment.
10. The Cicchellis are not members of the military service.
OneWest argues that OneWest is entitled to summary judgment under the Servicemembers Act because, as holder of the Note and Mortgage, and as servicer for Deutsche, OneWest is entitled to commence action to foreclose; furthermore, OneWest points out that the Cicchellis are not entitled to the protections of the Servicemembers Act. The Cicchellis contend that OneWest lacks standing to foreclose because it does not have a valid interest in the Mortgage, and therefore is not entitled to judgment under the Servicemembers Act. The Cicchellis argue that any assignment of the Mortgage from MERS to Deutsche was invalid because MERS lacks the authority to issue assignments and because IndyMac had already failed when MERS, acting as nominee for IndyMac, assigned the Mortgage to Deutsche. [Note 11] OneWest counter argues that MERS was the mortgagee of record, and therefore entitled to assign the mortgage to Deutsche, and that any assertion that MERS per se lacks the authority to assign mortgages is false.
The Servicemembers Act simply establishes procedures whereby mortgagees can make certain that there will be no cloud on title following the foreclosure as a result of an interested party having been in, or just released from, military service and thus under the protective umbrella of the [Servicemembers Act]. Beaton v. Land Court, 367 Mass. 385 , 390 (1975). As such, the threshold for standing in Servicemembers Act cases is relatively low, and is satisfied by the plaintiff having some interest in the subject mortgage, the mortgaged premises, and the title to them. Randle v. GMAC Mortgage, LLC, 18 LCR 546 , 550 (2010). In order to establish such an interest, a foreclosing entity may provide a complete chain of assignments linking it to the record holder of the mortgage, or a single assignment from the record holder of the mortgage. U.S. Bank National Association v. Ibanez, 458 Mass. 637 , 651 (2011).
In the case at bar, there is a clear chain of title, from MERS through Deutsche to OneWest, that establishes OneWest as the mortgagee, thereby conferring standing to OneWest for a Servicemembers Act action. The Mortgage plainly identifies MERS as the Cicchellis mortgagee. The Deutsche Assignment and the OneWest Assignment also clearly document the Mortgages chain of title from MERS to Deutsche and, in turn, from Deutsche to OneWest. As the mortgagee of record at the commencement of this action, then, OneWest has standing to bring a Servicemembers Act case and to initiate foreclosure proceedings.
The Cicchellis argument that OneWest lacks standing rests on the Cicchellis assertion that the transfer of the Mortgage from MERS to Deutsche and therefore the transfer of the Mortgage from Deutsche to OneWest was invalid. The Cicchellis argument that MERS was unable to assign the Mortgage to Deutsche because MERS lacks the capability to assign mortgages must fail. The Cicchellis rely on several out-of-state cases in an attempt to prove that MERS inherently lacks the authority to assign mortgages, none of which are binding upon this court, and cites no binding authority to support this contention. Moreover, the cases cited by the Cicchellis, along with the MERS Rules of Membership, also cited by the Cicchellis, state that when acting as a lenders nominee, MERS may only act with the lender or note-holders authorization. This does not help the Cicchellis case, because, as discussed below, MERS was in fact acting pursuant to the interests of the assignee of the lender and the Note-holder, Deutsche. In addition, Massachusetts case law leads to the conclusion that MERS generally may assign mortgages for which MERS is the mortgagee. Kiah v. Aurora Loan Services, LLC, No. 10-40161-FDS, 2010 U.S. Dist. LEXIS 121252, *11-14 (D. Mass. November 16, 2010)(assignment from MERS conveyed title to mortgage); Randle, 18 LCR at 550 (assignment of mortgage from MERS, acting as nominee for GMAC Bank, to defendant-mortgagee was valid); In re Lopez, 446 B.R. 12, 18-9 (2011)([t]hough MERS never held the Note, it could, by virtue of its nominee status, transfer the Mortgage on behalf of the Note holder.).
The Cicchellis also argue that MERS was unable to transfer the Mortgage to Deutsche because MERS was acting as nominee for IndyMac, and IndyMac had already failed at the time of the Deutsche Assignment. However, MERS was acting as nominee for Lender and Lenders successors and assigns, IndyMac being the Lender. Deutsche effectively became one of IndyMacs assigns upon the execution of the PSA, [Note 12] whereby IndyMac assigned the Note to Deutsche. As such, MERS, serving in its capacity as nominee for IndyMac and IndyMacs successors and assigns, was entitled to transfer the Mortgage on behalf of Deutsche, as one of IndyMacs assignees. [Note 13] A similar situation occurred in Kiah, where the plaintiff took out a loan, secured by a mortgage, with First Magnus Financial Corporation (First Magnus); MERS, acting as nominee for First Magnus and its successors and assigns, was listed as the mortgagee. [Note 14] First Magnus then assigned the plaintiffs note to Aurora Loan Services (Aurora). Several months later, First Magnus filed bankruptcy. The court in Kiah found that a transfer of the plaintiffs mortgage from MERS to Aurora was valid, stating, MERS had the power to act as the agent of any valid note holder under the terms of the mortgage documents First Magnus dissolution would not prevent its successors and assigns, including Aurora, from seeking transfer of the mortgage from MERS. Kiah, 2010 U.S. Dist. LEXIS 121252, at *13. Likewise, MERS had the authority to transfer the Mortgage to Deutsche, as IndyMacs assignee and the Note-holder at that time, pursuant to the PSA, despite IndyMacs dissolution in the time between the assignment of the Note to Deutsche and MERS transfer of the Mortgage to Deutsche.
MERS also had a fiduciary duty to assign or foreclose the Mortgage in Deutsches interest since Deutsche was the Note-holder at the time of the Deutsche Assignment. [Note 15] When a mortgage and relevant promissory note are held by two different entities in Massachusetts, the holder of the mortgage holds the mortgage in trust for the purchaser of the note . Ibanez, 448 Mass. at 652; See also Barnes v. Boardman, 149 Mass. 106 , 114 (1889) (In some jurisdictions it is held that the mere transfer of the debt, without any assignment or even mention of the mortgage, carries the mortgage with it This doctrine has not prevailed in Massachusetts, and the tendency of the decisions here has been that in such cases the mortgagee would hold the legal title in trust for the purchaser of the debt .). Accordingly, MERS, as the record mortgagee retained legal title to the Mortgage, along with a fiduciary duty to the holder of the Note. See In re Marron, No. 10-45395-MSH at 8-9 (Bankr. D. Mass. June 29, 2011)(In Massachusetts, when a mortgage and applicable note are owned by different entities the mortgagee retains legal title to the mortgage, albeit with a fiduciary duty to act on behalf of the owner of the note which holds a beneficial interest in the mortgage. The mortgagee has a fiduciary duty as trustee to act on behalf of the note owner, but retains title to the mortgage and the right to assign the mortgage with that duty. This analysis does not change just because MERS, as nominee, is the mortgagee.). By the time of the Deutsche Assignment, Deutsche held the Note, and therefore, MERS had a duty to act in Deutsches interests, which it did by assigning the Mortgage to Deutsche. [Note 16]
Based on these facts I find that OneWest, as the Mortgage holder, has standing to bring an action against the Cicchellis under the Servicemembers Act. [Note 17] Furthermore, because there is no evidence that the Cicchellis are currently in the military or recently released from military service and the Cicchellis have not alleged that they are I find that OneWest is entitled to judgment in OneWests favor under the Servicemembers Act.
With regards to the Cicchellis case (10 MISC 436809), the Cicchellis claim that OneWest lacks standing to foreclose the Mortgage is based on the Cicchellis assertion that the transfers of the Mortgage were invalid and the lack of judgment under the Servicemembers Act. As discussed above, the transfer of the Mortgage from MERS through Deutsche to OneWest was in fact valid. Because I am also issuing a judgment under the Servicemembers Act, I find that the Cicchellis are not entitled to an injunction against OneWests foreclosure on the Mortgage.
As a result of the forgoing, I ALLOW OneWests Motion for Summary Judgment.
Judgment to enter accordingly.
[Note 1] The Amended Complaint, with OneWest substituted as Plaintiff, was also filed on September 23, 2010.
[Note 2] By document dated June 24, 2005, the Cicchellis mortgaged to the Mortgage Electronic Registration System (MERS), as nominee for IndyMac Bank, F.S.B. (IndyMac) the property located at 32 Bancroft Avenue, Milford, Massachusetts. On May 14, 2009, MERS assigned said Mortgage to Deutsche. Deutsche, in turn, assigned said mortgage to OneWest on September 15, 2009. OneWest remains the mortgagee today.
[Note 3] Affidavit of Plaintiff is an affidavit of Rebecca Marks, a supervisor at OneWest.
[Note 4] Due to the consolidation of the cases, there is inconsistency within the parties memoranda regarding who is the plaintiff and who is the defendant. For the sake of clarity, I will refer to parties by their name rather than plaintiff and defendant.
[Note 5] This deed is not included in the record, but is specifically referenced in Exhibit A of the Mortgage. No party contests that the Cicchellis were deeded the Locus prior to June 24, 2005.
[Note 6] The PSA defines Mortgage Loans as [s]uch of the mortgage loans transferred and assigned to the Trustee pursuant to this Agreement, as from time to time are held as a part of the Trust Fund the Mortgage Loans so held being identified on the Mortgage Loan Schedule, notwithstanding the foreclosure or other acquisition of the title of the related Mortgaged Property. The Mortgage Loan Schedule lists the Cicchellis mortgage loan.
[Note 7] The Mortgage was not assigned to Deutsche until May 14, 2009. The cause for this delay is unclear, but, as the discussion below demonstrates, it does not affect OneWests standing.
[Note 8] Exhibit G-1 is the Form of Initial Certification of Trustee, which states in relevant part, the undersigned, as Trustee, hereby certifies that, as to each Mortgage Loan listed in the Mortgage Loan Schedule it has received: (i) the original Mortgage Note, endorsed as provided in the following form: Pay to the order of _______, without recourse. .
[Note 9] The Deutsche Assignment assigns the mortgage together with the mortgage note secured thereby. Since MERS did not hold the Note, however, this language is superfluous and the Deutsche Assignment only transferred the Mortgage to Deutsche. As discussed, supra, Deutsche already held the Note as of September 8, 2005.
[Note 10] Deutsche states that Deutsche has not negotiated, transferred or delivered the Note to any other entity after receiving the Note as part of the PSA. However, the OneWest Assignment states that
[Deutsche] does hereby grant, bargain, sell, assign, transfer, and set over to OneWest Bank, FSB dated May 14, 2009 with a mailing address of 2900 Esperanza Crossing, Austin TX 78758 and its successors and assigns, all interest under that certain mortgage to [MERS], as nominee for IndyMac Bank, F.S.B. from Eroilda Paula Cicchelli and Ray Cicchelli, dated 6/24/2005 and recorded 7/1/2005 in Book 36722 at Page 316 of the Worcester County Worcester Registry of Deeds, together with the mortgage note secured thereby.
(emphasis added). As such, OneWest currently holds both the Note and the Mortgage.
[Note 11] Consequentially, the Cicchellis argue, Deutsches assignment of the Mortgage to OneWest is also invalid, because Deutsche never properly received the Mortgage.
[Note 12] The Cicchellis argue that there is a dispute of material fact regarding which Pooling and Servicing Agreement transferred the Note to Deutsche. Deutsche attached the incorrect Pooling and Servicing Agreement to its Motion for Summary Judgment, and corrected this mistake by attaching the correct Pooling and Servicing Agreement (the PSA) in its Response to the Cicchellis Opposition to Motion for Summary Judgment. Since Deutsche addresses and corrects its error in its Response to the Cicchellis Opposition to Motion for Summary Judgment and provides the court with the correct Pooling and Servicing Agreement, which clearly includes the Cicchellis loan, there is no factual dispute regarding the PSA. The Cicchellis also assert that this court cannot consider the correct PSA because Deutsche does not provide an affidavit certifying that the PSA provided is a true and accurate copy. However, since the Cicchellis have not moved to strike the PSA from the record for its lack of certifying affidavit, this court may consider the PSA in deciding summary judgment. Cruickshank v. Commerce Ins. Co., 2004 Mass. App. Div. 103 , fn. 6 (2004)( in the absence of a motion to strike, trial court was justified in considering reports that were not sworn or certified); Knights v. Metro. Prop. & Cas. Ins. Co., 2004 Mass. App. Div. 98 , 101 (2004)(As to Griffins affidavit, copies of documents attached thereto were not sworn or certified as required by Rule 56(e) and should thus have been stricken upon [plaintiffs] motion)(emphasis added); Fowles v. Lingos, 30 Mass. App. Ct. 435 , 439-440 (1991)(if a party does not move to strike the defective portion of an opponents affidavit, a judge may, in his discretion, rely on the defective portions).
[Note 13] The Cicchellis further argue that because the Deutsche Assignment states only that MERS is acting as nominee for IndyMac Bank, F.S.B. and excludes the phrase and successors and assigns, MERS was only purporting to act as nominee for IndyMac specifically. Since, at the time of the Deutsche Assignment, IndyMac was closed, the Cicchellis argue, the Deutsche Assignment is therefore nullified because it is impossible for MERS to transfer a mortgage as a nominee for a non-existent entity. However, the language of the Mortgage, from which MERS derived its authority to transfer the Mortgage and which is explicitly referenced in the Deutsche Assignment, clearly authorizes MERS to act as nominee for IndyMac and its successors and assigns. As such, this court is not persuaded that MERS was attempting to act as nominee for a nonexistent IndyMac rather than IndyMacs assign, Deutsche, in the Deutsche Assignment.
[Note 14] The language of the mortgage deed in Kiah appears to have been identical to the Mortgage, stating, MERS is a separate corporation that is acting solely as nominee for Lender [defined as First Magnus Financial Corporation] and Lenders successors and assigns. Kiah, 2010 U.S. Dist. LEXIS 121252, at *3.
[Note 15] Deutsche clearly held the Note at the time of the Deutsche Assignment. Under the PSA, signed September 8, 2005, IndyMac, as the Seller, transferred a schedule of mortgage loan notes to the Depositor, IndyMac MBS, Inc, who, in turn, transferred the mortgage loan notes to the Trustee, Deutsche. The PSAs schedule of mortgage loan notes includes the Cicchellis Note. Deutsche did not assign or transfer the Note until the OneWest Assignment, September 15, 2009, and therefore still held the Note at the time of the Deutsche Assignment on May 14, 2009.
[Note 16] Neither party asserts that MERS did not act in the interests of Note-holder Deutsche in the Deutsche Assignment.
[Note 17] Although OneWest need only prove that it holds the Mortgage in order to have standing for a Servicemembers Act case, this court notes that, pursuant to the OneWest Assignment, OneWest is also the Note-holder.