Home DEUTSCHE BANK NATIONAL TRUST CO., as trustee for American Home Mortgage Investment Trust 2006-3, Mortgage-Backed Notes, Series 2006-3 v. LINDSEY BUTLER

MISC 11-447828

December 8, 2011


Long, J.



This is a case under the Servicemember's Civil Relief Act of 1940 as amended, 50 U.S.C. App. §§ 501 et seq. ("the Act"), brought by plaintiff Deutsche Bank against defendant Lindsey Butler, alleged to be the owner of 12 Atlantic Avenue in Nantucket. Deutsche Bank must establish its standing to bring the action, since standing is a matter of subject matter jurisdiction. Sullivan v. Chief Justice of Admin. & Mgmt. of the Trial Court, 448 Mass. 15 , 21 (2001). But once standing is found, this proceeding is limited by statute and case law to the determination of a single question: is Ms. Butler entitled to the benefits of that Act? [Note 1] St. ,1990,. c. 496 § 1. ("Such proceedings shall be limited to the issues of the existence of such persons and their rights [under the Act] if any."); Beaton v. Land Court, 367 Mass. 385 , 388, 390-91 (1975) (same). If the answer to that question is "no," judgment is entered accordingly.

Ms. Butler has challenged Deutsche Bank's standing, as well as raised certain affirmative defenses. For the reasons set forth below, I find that standing has been established. I also find and rule that Ms. Butler's affirmative defenses are inapplicable to this proceeding. Accordingly, judgment shall enter that Ms. Butler is not entitled to the benefits of the Act.


No extended discussion is necessary on the issue of Deutsche Bank's standing. A plaintiff in a Servicemember's proceeding need only meet the general standing requirement - that it have a "legally cognizable injury" or, phrased otherwise, have "suffered" or be "in danger of suffering legal harm." Mass. Assoc. of Ind. Ins. Agents and Brokers, Inc. v. Comm'r of Ins., 373 Mass. 290 , 292-293 (1977); Tax Equity Alliance for Mass. v. Commissioner of Rev., 423 Mass. 708 , 715 (1996). See also Sullivan, 448 Mass. at 21-22. A plaintiff can thus be, among others, the mortgage holder, the note holder, the holder of an option to obtain the mortgage or note, the loan servicer, the trustee of the securitized trust to which the loan has been transferred, or even the servicer or trustee of a securitized trust or other entity with an arguable claim to the mortgage or note, i.e. anyone with a financial stake in the loan or mortgage, and thus a "legally cognizable injury," if the collectability of the loan or enforceability of the mortgage is affected or potentially affected by the Servicemember's Act. See HSBC Bank USA v. Matt, Land Ct. Case No. 10 Misc. 421195, Memorandum and Order on Defendant's Motion to Dismiss (Jul. 8, 2010) (Long, J.); BAC Home Loans Servicing LP v. Thomas, Land Ct. Case No. 10 Misc. 435156, Memorandum and Order on Defendants' Motion to Dismiss (Jan. 5, 2011) (Long, J.); U.S. Bank v. Saroufim, Land Ct. Case No. 10 MISC. 428266, Memorandum and Order on Defendant's Motion to Dismiss (Dec. 27, 2010) (Long, J.); and cases cited therein.

Here, Deutsche Bank is currently the mortgagee by assignment from Mortgage Electronic Registration Systems, Inc., the original mortgagee as nominee for American Brokers Conduit. MERS had authority to assign the mortgage, with or without the demonstration of its principal's assent. See BAC Home Loans Servicing LP v. Kay, Land Court Case No. 10 Misc. 428719, Memorandum and Order on Defendant's Motion to Dismiss (Dec. 22, 2010) (Long, J.) (holding that MERS had standing, on its own, to bring a Servicemember's action); Lyons v. Mortgage Electronic Registration Systems, Inc., Land Court Case No. 09 Misc. 416377 (JCC), Decision Allowing Defendants' Motion to Dismiss the Complaint Under Mass. R. Civ. P. 12(b)(6) (Jan. 4, 2011) (Cutler, J.) (holding that MERS had the authority under the mortgage, on its own, to assign that mortgage); In re Marron, U.S. Bankruptcy Ct., D. Mass., Chapter 7, Case No. 10-45395- MSH, Memorandum of Decision on Motion for Relief From Stay at 7-13 (Jun. 29, 2011) (Hoffman, J.) (same, collecting cases); Cullane v. Aurora Loan Services of Nebraska, U.S. District Ct., D. Mass., Civil Action No. 11-11098-WGY, Mem. & Order (Nov. 28, 2011). See also Federal National Mortgage Ass 'n v. Cradler, Mass. Appeals Ct. Case No. 10-P-1 888, Mem. & Order Pursuant to Rule 1:28, 2011 WL 2135580 (Mass. App. Ct., Jun. 1, 2011) ("The mortgage provides, in pertinent part, that `MERS is a separate corporation that is acting solely as a nominee for Lender and Lender's successors and assigns. MERS is the mortgagee under this Security Instrument.' The defendant also tries to rely upon cases from other jurisdictions (mostly trial court decisions) that have held that MERS, as a servicing agent, has no authority to assign a mortgage. However, the mortgage at issue here specifically provides that MERS is the mortgagee, and MERS otherwise did assign the mortgage in question to Chase Home Finance LLC. The Land Court judge rejected the defendant's argument and he failed to appeal the ruling.").

Ms. Butler next argues that the assignment is ineffective because it purports to confirm an earlier assignment signed on behalf of MERS by someone allegedly using another's name without that person's knowledge or authorization, and may itself have been signed by someone acting without proper authorization. Whether or not these allegations are true has no legal significance. "MERS `s certifying officers `purport [] to hold the position of... vice president ... secretary ... [or] assistant to ... such office or position.' Mass. Gen. Laws ch. 183, § 54B. That they hold themselves out as officers of MERS, the `entity holding [the] mortgage,' is all that the statute requires with respect to a signer's authority." Cullane, supra at 49.

Ms. Butler's last argument is the most interesting, but again misconceived. G.L. c. 244, § 35A prohibits "the mortgagee [of a residential property], [Note 2] or anyone holding thereunder" from "accelerating maturity of the unpaid balance of such mortgage or otherwise enforcing] the mortgage" until the statutory period and its associated right to cure have elapsed, measured from "the date a written notice [meeting the requirements of the statute] is given by the mortgagee to the mortgagor." A copy of the notice and an affidavit certifying compliance must be filed "in any action or proceeding to foreclose on such residential real property." G.L c. 244, § 35A(j). [Note 3] Ms. Butler claims that the notice she received failed to meet those statutory requirements in one or more respects. This may or may not be so, and the deficiencies, if any, may or may not be significant or material. But those deficiencies are irrelevant in a Servicemember's action for the simple reason that a Servicemember's Civil Relief Act case is not part of a foreclosure. Beaton v. Land Court, 367 Mass. 385 , 390 (1975). As held in Beaton:

Actions taken to comply with the 1940 Relief Act, such as the steps prescribed by St. 1943, c. 57 [now St. 1990, c. 496 § 1] are not in themselves mortgage foreclosure proceedings in any ordinary sense. Rather, they occur independently of the actual foreclosure itself and of any judicial proceedings determinative of the general validity of the foreclosure. Statute 1943, c. 57, as amended, simply establishes procedures whereby mortgagees, in addition to taking all steps necessary to foreclose, 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 1940 Relief Act. If a foreclosure were otherwise properly made, failure to comply with the 1940 Relief Act would not render the foreclosure invalid as to anyone not entitled to the protection of that act.

Id. (emphasis added; internal citations omitted). Thus, held the court, access to Servicemember proceedings is limited "to persons entitled to the benefits of the act or to persons appearing on their behalf," and "the issues in such proceedings [are limited] to the existence of such persons and their rights, if any." Id. at 390-91. As the court noted:

It is true that these restrictions may prevent mortgagors from raising in these particular proceedings many meritorious issues pertaining to the mortgagee's ultimate right to foreclose. This, however, is of no constitutional significance, since other adequate procedures are available to the mortgagor in the same or another forum where these issues may be raised prior to the mortgagor's loss of his possessory or other important rights in the property subject to the mortgage. In other words, mandatory procedural segregation of various aspects of related claims or defenses is constitutionally permissible so long as all the available procedures combined satisfy the mandates of the due process clause.

Id. In short, issues arising under G.L. c. 244, § 35A are outside the allowable parameters of a Servicemember's proceeding and must be asserted in a separate action. Any other ruling would be contrary to Beaton.


For the foregoing reasons, judgment shall enter that Ms. Butler is not entitled to the benefits of the Servicemember's Civil Relief Act.



[Note 1] The Act "contains special rules regarding debts secured by a mortgage, trust deed, or similar security interest in real or personal property owned by a servicemember. Generally, the act prohibits the sale, foreclosure, or seizure of property, based on a breach of such a secured obligation, during the period of military service or within 90 [now 150] days thereafter. The prohibition applies only to obligations that originated prior to the servicemember's military service, and for which the servicemember is still obligated." Office of the Comptroller of the Currency, Administrator of National Banks, Advisory Letter No. AL 2004-8 Re: Servicemembers Civil Relief Act at 2 (2004).

[Note 2] The statute defines a "residential property" as "real property located in the commonwealth having thereon a dwelling house with accommodation for 4 or less separate households and occupied, or to be occupied, in whole or in part by the obligor on the mortgage debt; provided, however, that residential property shall be limited to the principal residence of a person; provided further, that residential property shall not include an investment property or residence other than a primary residence; and provided further, that residential property shall not include residential property taken in whole or in part as collateral for a commercial loan." G.L. c. 244, § 35A(a).

[Note 3] A copy must also be provided to the borrower and filed in the land court whenever "commercially reasonable alternatives" to foreclosure have been negotiated in good faith, been unsuccessful, and a creditor chooses to begin foreclosure proceedings prior to the expiration of 150 days. G.L. c. 244, § 35A(f).