On April 3, 2013, Plaintiff Ann A. Jenne (Jenne), filed her Complaint to Remove Cloud from Title and for Declaratory Judgment that Defendants Foreclosure Auction of Plaintiffs Premises is Void Pursuant to: G.L. c. 185, § 1(k), G.L. c. 185, § 21, G.L. c. 244, § 35A, G.L. c. 244, § 14, G.L. c. 244, § 15, G.L. c. 231A, § 1, G.L. c. 240 § 1-10, G.L. c. 244, § 1. On April 24, 2013, Jenne filed her First Amended Complaint to Remove Cloud from Title and for Declaratory Judgment that Defendants Foreclosure Auction of Plaintiffs Premises is Void Pursuant to: G.L. c. 185, § 1(k), G. L. 183, § 21, G.L. c. 244, § 35A, G.L. c. 244, § 14, G.L. c. 244, § 15, G.L. c. 231A, § 1, G.L. c. 240, § 1-10, G.L. c. 244, § 1 (complaint). Defendants Aurora Loan Services (Aurora), Nationstar Mortgage LLC (Nationstar), and Mortgage Electronic Registration Systems, Inc. (MERS) filed Aurora Loan Services, LLC, Nationstar Mortgage LLC and Mortgage Electronic Registration Systems Motion to Dismiss (the Aurora Motion to Dismiss), and Defendants Memorandum of Law in Support of Its Motion to Dismiss, on May 8, 2013. The Case Management Conference was held on May 13, 2013. Jenne filed Plaintiffs Opposition to Defendant Aurora Loan Service LLC, Nationstar Mortgage LLC, Mortgage Electronic Registration Systems, Inc. Motion to Dismiss, on June 7, 2013. On June 13, 2013, Defendants Yuanxin Shou (Shou) and Erlian Lu (Lu) filed The Defendants, Yuanxin Shou and Erlian Lus Motion to Dismiss the Plaintiffs First Amended Complaint (the Shou/Lu Motion to Dismiss), and The Defendants, Yuan Shou and Erlian Lus Memorandum of Law in Support of Their Motion to Dismiss. On June 17, 2013, Aurora, Nationstar, and MERS filed Defendants Aurora Loan Services, LLC, Nationstar Mortgage, LLC and Mortgage Electronic Registration Systems, Inc.s Reply to Plaintiffs Opposition to Their Motion to Dismiss. On July 9, 2013, Jenne filed Plaintiffs Opposition to Defendants Yuanxin Shou and Erlian Lus Motion to Dismiss. On July 12, 2013, the Aurora Motion to Dismiss and the Shou/Lu Motion to Dismiss were heard and taken under advisement. The Aurora Motion to Dismiss and the Shou/Lu Motion to Dismiss are hereinafter referred to as the Motions to Dismiss. Defendants Notice of Supplemental Authority was filed on March 13, 2014, and Plaintiffs Notice of Supplemental Authority was filed on March 19, 2014.
In considering a motion to dismiss for failure to state a claim, the court accepts as true well-pleaded factual allegations and reasonable inferences drawn therefrom, Marram v. Kobrick Offshore Fund, Ltd., 442 Mass. 43 , 45 (2004), but does not accept legal conclusions cast in the form of factual allegations. Iannacchino v. Ford Motor Co., 451 Mass. 623 , 633 (2008), quoting Schaer v. Brandeis Univ., 432 Mass. 474 , 477 (2000). Generally, if matters outside the pleadings are presented to and not excluded by the court, the motion will be treated as a motion for summary judgment. Mass. R. Civ. P. 12(b), 12(c). The court may, however, take into account matters of public record and documents integral to, referred to, or explicitly relied on in the complaint, whether or not attached, without converting the motion to a motion for summary judgment. Marram, 442 Mass. at 45 n.4; Schaer, 432 Mass. at 477; Reliance Ins. Co. v. City of Boston, 71 Mass. App. Ct. 550 , 555 (2008); Shuel v. DeIeso, 16 LCR 329 , 329 n.2 (2008).
Therefore, the court will accept as true the allegations of the complaint for the purposes of the Motions to Dismiss. The court will consider the various recorded instruments submitted with the complaint and the Motions to Dismiss, and other documents referred to in the complaint. Based on the complaint and these documents, the court accepts as true the following facts.
Jenne resides at 98 Southgate Street, Worcester, Massachusetts (Property). On June 7, 2007, Jenne gave a mortgage (Mortgage) conveying the Property to MERS as security for a note (Note) payable to Drew Mortgage Associates, Inc. (Drew), in the amount of $198,750. The Mortgage is recorded at Worcester County Registry of Deeds (registry) at book 41286, page 3. Loan No.: 6214679160 is displayed on the first page of the Mortgage.
Aurora sent Jenne a letter pursuant to G.L. c. 244, § 35A, dated December 4, 2008 (§ 35A letter), informing Jenne that a loan, numbered 0040679243, was in default due to an overdue balance. The § 35A letter informed Jenne that the current balance due was $3,859.29 and that she had a right to cure the default on or before March 4, 2009, ninety days from the date of the letter. In the § 35A letter, Aurora provided two addresses to which payments could be sent, and two toll-free phone numbers presumably that Jenne could call to arrange payment. The § 35A letter stated that if payment was not made within ninety days, then Aurora could demand the entire balance outstanding under the terms of the Mortgage and ultimately foreclose on Jennes right of redemption and seize her home. The § 35A letter then informed Jenne that she had the right to assert in the foreclosure proceedings the non-existence of a default or any other defense [she] may have [had] to acceleration and sale. The § 35A letter went on to state: The name and address of the mortgagee for this note and mortgage is Aurora Loan Services, 10350 Park Meadows Drive, Littleton, CO 80124. The § 35A letter also stated that the originator of the Mortgage was First Magnus Corporation. The letter provided Jenne with two phone numbers, one to call to obtain the exact amount she owed and the other to call in order to inquire if she was eligible for certain workouts through Auroras loss mitigation department. The letter informed Jenne that she may have been eligible for assistance from the Massachusetts Housing Finance Agency and the Massachusetts Division of Banks and provided her with addresses and phone numbers for those entities.
MERS transferred the Mortgage to Aurora by means of an assignment dated March 9, 2009 (Assignment). The Assignment states that although executed on March 9, 2009, its effective date is February 27, 2009. A hand written annotation on the assignment indicates the Assignments date of transfer is July 21, 2007. The Assignment is recorded at the registry at book 43958, page 54.
Aurora filed a complaint to foreclose the Mortgage with the Massachusetts Land Court Department on March 17, 2009, entitled Aurora Loan Services, LLC. v. Jenne, Massachusetts Land Court, 09 MISC 396489 (Servicemembers action). Notice of the Servicemembers action was recorded at the registry at book 44785, page 254, on August 31, 2009. The notice informed Jenne that Aurora had filed a complaint for authority to foreclose. The notice advised Jenne that if she was entitled to benefits under the Servicemembers Civil Relief Act and objected to the foreclosure she or her attorney should file a written appearance and answer at the Land Court by September 14, 2009. On October 16, 2009, judgment entered that Jenne was not entitled to the benefits of the Servicemembers Civil Relief Act and that Aurora was authorized and empowered to make an entry and to sell the Property. This judgment is recorded at the registry at book 47168, page 305.
A foreclosure deed, dated September 15, 2010, was recorded at the registry on March 9, 2011, at book 47168, page 309. Recorded with the foreclosure deed is an affidavit executed by Reneau J. Longoria, as attorney-in-fact of Aurora. The affidavit asserts that Jenne did not make mortgage payments when they were due; that in compliance with G.L. c. 244, § 14, through its attorney, Aurora published notice of the foreclosure sale in the Worcester Telegram and Gazette for three consecutive weeks: June 7, 2010, June 14, 2010, and June 21, 2010; that all notices required by G.L. c. 244, §§ 14, 17B, and 26 U.S.C. § 7425(c) were sent in a timely fashion; and that, after being postponed twice, on September 7, 2010, at 11:00 a.m., the Property was auctioned to the highest bidder, Aurora, for $36,000 by Kevin Minghella of Monroe Auction Group, a licensed auctioneer.
A Certificate of Entry to Foreclose, executed on September 7, 2010, the same day as the foreclosure sale, is recorded at the registry at book 47168, page 308. The certificate is signed by two witnesses, John G. Shack III and Laura Bloise, who state that on the date of the foreclosure sale, they saw Jo-Anne Collins, an agent of Aurora, make a peaceable unopposed entry onto the Property for the purpose of foreclosing Jennes equitable right to redeem.
Aurora conveyed the Property to Nationstar on April 19, 2012, for an amount less than one dollar, by a deed recorded at the registry on January 16, 2013, at book 50295, page 35. Nationstar conveyed the Property to Shou and Lu on January 17, 2013, for $49,500, by a deed recorded at the registry on February 5, 2013, at book 50400, page 162.
The complaint sets forth multiple claims that the foreclosure auction conducted at the Property by Aurora on September 7, 2010 is void. [Note 1] While the complaint refers to G.L. c. 240, §§ 1-5, G.L. c. 240, §§ 6-10, and G.L. c. 185, § 1(k), it does not specify which claims are raised under which of these distinct causes of action. In analyzing the Motions to Dismiss, the court addresses the allegations and claims of the complaint by its paragraph numbers.
1. Continued peaceable possession
Two ways to foreclose a mortgage in Massachusetts are by entry and continuation of possession for three years pursuant to G.L. c. 244, § 1, and by sale under the statutory power of sale pursuant to G.L. c. 183, § 21, and G.L. c. 244, §§ 11 through 17C. A mortgagee may concurrently pursue both types of foreclosure. See Chamberlain Garages, Inc. v. New England Bond & Mtge. Co., 267 Mass. 453 , 454-455 (1929). Mortgagees commonly make a foreclosure by entry and possession at the time of a foreclosure sale. See E.C. Mendler, Massachusetts Conveyancers Handbook with Forms § 20:34 (4th ed. 2008) (Conveyancers Handbook). It appears that Aurora concurrently pursued foreclosure by entry and possession under G.L. c. 244, § 1, and foreclosure under the statutory power of sale pursuant to G.L. c. 183, § 21 and G.L. c. 244, §§ 11 through 17C.
Paragraph 15 of the complaint challenges Auroras foreclosure by entry and possession on the ground that Auroras entry and possession of the Property has not been continued peaceably for the statutory period. General Laws c. 244, § 1, provides that [a] mortgagee may, after breach of condition of a mortgage of land, recover possession of the land mortgaged by an open and peaceable entry thereon, . . . and possession so obtained, if continued peaceably for three years from the date of recording . . . shall forever foreclose the right of redemption. G.L. c. 244, § 1. If the mortgagor wants to challenge a foreclosure by entry, it is incumbent on him to do so before the three-year period has elapsed. Singh v. 207-2011 Main St., LLC, 78 Mass. App. Ct. 901 , 902 (2010). Auroras Certificate of Entry to Foreclose was executed by two witnesses on September 7, 2010, and recorded pursuant to G.L. c. 244, § 2, at the registry at book 47168, page 308. The filing of Jennes complaint on April 3, 2013, two years, six months after Aurora recorded its Certificate of Entry, challenges Auroras peaceable possession, under G.L. c. 244, § 1, within the three-year statutory period. Paragraph 15 of the complaint therefore states a claim upon which relief can be granted. However, as discussed below, the complaints claims about the foreclosure by sale do not state a claim, rendering Jennes claims concerning the foreclosure by entry moot.
2. Whether MERS held the Mortgage and Note on the date of the Assignment
In paragraphs 22 and 23 of the complaint, Jenne asserts that the Assignment is invalid because there is no evidence that MERS held the Note and the Mortgage on the date of the Assignment. There is no reason to doubt that the Assignment conveyed the Mortgage to Aurora. MERS was the mortgagee of record at the time of the Assignment by virtue of the Mortgage, which states on its first page: MERS is the mortgagee under this Security Instrument. The Assignment does purport to transfer the Mortgage together with the Note from MERS to Aurora. As to the Note, whether MERS had authority to assign, or did in fact assign, the Note is irrelevant. [N]othing in Massachusetts law requires a foreclosing mortgagee to demonstrate that prior holders of the record legal interest in the mortgage also held the note at the time each assigned its interest in the mortgage to the next holder in the chain. Sullivan v. Kondaur Capital Corp., 85 Mass. App. Ct. 202 , 210 (2014). Prior to the decision of Eaton v. Federal Natl Mtge. Assn, a foreclosing mortgagee in Massachusetts was not required to demonstrate ownership of the debt secured by the mortgage. Eaton v. Federal Natl Mtge. Assn, 462 Mass. 569 , 587-588 (2012). In Eaton, the SJC held that a foreclosing mortgagee must hold not only the mortgage, but also either hold the mortgage note or act on behalf of the note holder at the time mandatory notice of sale is given. Id. at 569. Eaton was applied prospectively to mortgage foreclosure sales for which the mandatory notice of sale was given after June 22, 2012. Id.
The foreclosure in this case is pre-Eaton. Aurora asserts in an affidavit, recorded at the registry at book 47168, page 312, that it gave notice to Jenne by certified mail thirty days before the foreclosure sale on September 7, 2010. Therefore Eatons prospective holding does not apply to Jennes foreclosure and it is inapposite whether or not the Assignment effectively conveyed the Note to Aurora. At the time of foreclosure, Aurora was under no obligation to show that it either held the Note or acted on behalf of the Note-holder. Paragraphs 22 and 23 of the complaint are dismissed for failure to state a claim upon which relief can be granted. 3. Compliance with G.L. c. 244, § 35A
In paragraph 26 of the complaint, Jenne challenges the validity of the § 35A letter on the ground that Aurora did not hold the mortgage on December 4, 2008, when the § 35A letter was sent. [Note 2] Whether Auroras § 35A letter strictly complied with G.L. c. 244, § 35A is of no bearing on the validity of Auroras foreclosure sale. The statutory power of sale, set forth in G.L. c. 183, § 21, provides that upon default . . . the mortgagee . . . may sell the mortgaged premises . . . by public auction . . . first complying with the terms of the mortgage and with the statutes relating to the foreclosure of mortgages. G.L. c. 183, § 21. In U.S. Natl Assn v. Schumacher, 467 Mass. 421 (2014), the SJC explained that § 35A is not one of the statutes relating to the foreclosure of mortgages by the exercise of a power of sale, G.L. c. 183, § 21, and that a mortgagees failure to strictly comply with § 35A does not make a foreclosure void. Id. at 431. The SJC explained that a foreclosure can be undone if the mortgagor files a separate action in equity and prove[s] that the violation of § 35A rendered the foreclosure so fundamentally unfair that she is entitled to affirmative equitable relief, specifically the setting aside of the foreclosure sale for reasons other than failure to comply strictly with the power of sale provided in the mortgage. Id. at 433 (Gants, J., concurring), quoting Bank of Am., N.A. v. Rosa, 466 Mass. 613 , 624 (2013); see Bank of N.Y. Mellon Corp. v. Wain, No. 13-P-101, slip op. at 2 & n.8 (Mass. App. Ct. June 24, 2014).
Although the title of the complaint references G.L. c. 185, § 1(k), [Note 3] the complaint does not specifically plead that a violation of G.L. c. 244, § 35A, rendered the foreclosure so fundamentally unfair that Jenne is entitled to affirmative equitable relief under G.L. c. 185, § 1(k). Paragraph 26 of the complaint pleads that Aurora did not hold the mortgage when the § 35A letter was sent. Under Schumacher, this alone creates no basis for post-foreclosure relief. Schumacher, 467 Mass. at 431. Paragraph 26 fails to state a claim and is dismissed without prejudice. Because Schumacher was decided while this matter was pending, Jenne may amend her complaint within fourteen days of this Order to state a claim in equity that Auroras violation of § 35A rendered the foreclosure so fundamentally unfair that Jenne is entitled to affirmative equitable relief, specifically the setting aside of the foreclosure sale. [Note 4]
4. Compliance with notice provisions of G.L. c. 244, §§ 14 and 15
Paragraph 27 of the complaint alleges that the foreclosure auction was defective because it failed to strictly comply with the notice provisions and requirements of G.L. c. 244, §§ 14 and 15. General Laws c. 244, § 14, sets forth a number of notice requirements a mortgagee must strictly comply with in order to exercise the statutory power of sale. Among the requirements are a duty of the mortgagee to publish notice of the sale for three successive weeks before the sale and to send notice of the sale by registered mail to the owner of record thirty days prior to the sale. G.L. c. 244, § 14. General Laws, c. 244, § 15, requires the mortgagees attorney to, after the sale, record in the registry a copy of the notice and an affidavit as evidence of compliance with §14. Section 15 provides:
The person selling, or the attorney duly authorized by a writing . . . shall, after the sale, cause a copy of the notice and his affidavit, fully and particularly stating his acts . . . to be recorded in the registry of deeds for the county or district where the land lies, with a note or reference thereto on the margin of the record of the mortgage deed, if it is recorded in the same registry. If the affidavit shows that the requirements of the power of sale and of the statute have in all respects been complied with, the affidavit or a certified copy of the record thereof, shall be admitted as evidence that the power of sale was duly executed (emphasis added).
G.L. c. 244, § 15. A pre-Eaton G.L. c. 244, § 15 affidavit should recite that: (i) there was a breach or default of the mortgage, (ii) notice was given by mail and publication in accordance with the statute, including a full copy of the advertised notice (which may be a newspaper clipping), (iii) sale took place at the time and place specified in the notice or pursuant to adjournments, and (iv) sale was made by public auction by a licensed auctioneer to a named highest bidder in a specified amount. Conveyancers Handbook § 20:37.
Aurora points to its attorneys affidavit, recorded at the registry at book 47168, page 312. Auroras affidavit states that
principal, interest, and tax obligations mentioned in the mortgage recorded with the [registry] at Book 41286, Page 3 were not paid. . . . [N]otice of the sale [was] published in the Worcester Telegram and Gazette . . . for three consecutive weeks: June 7, 2010, June 14, 2010, and June 21, 2010. . . . Pursuant to said notice, on June 30, 2010, at 01:00 PM, said acution [sic] was postponed by public proclamation to . . . September 7, 2010, at 11:00 AM, at which time and place upon the mortgaged premises [Aurora through its attorney] sold the mortgaged premises at public auction by Kevin Minghella of Monroe Auction Group, a licensed auctioneer.
A copy of the notice purportedly published in the Worcester Telegram and Gazette is recorded at the registry at book 47168, page 314. Auroras recorded affidavit and notice constitute prima facie evidence of compliance with the notice requirements set forth in G.L. c. 244, §§ 14 and 15. Federal Natl Mtge. Assn v. Hendricks, 463 Mass. 635 , 641- 642 (2012). The only element of Auroras compliance with §§ 14 and 15 that Jenne challenges is the notice it gave under paragraph 22 of the Mortgage, as discussed below. Jenne does not raise any specific challenge to any other aspect of Auroras compliance with §§ 14 and 15.
5. Paragraph 22 of the Mortgage
In her opposition to the Motions to Dismiss, Jenne argues that the foreclosure was invalid because Aurora failed to comply with the terms set forth in paragraph 22 of the Mortgage. Paragraph 22 of the Mortgage provides:
Lender shall give notice to Borrower prior to acceleration following Borrowers breach of any covenant or agreement in this Security Instrument. . . . The notice shall . . . inform Borrower of . . . the right to bring a court action to assert the non-existence of a default or any other defense of Borrower to acceleration of sale.
Jenne points out that the § 35A letter does not contain the language required by paragraph 22 of the Mortgage. Instead, the § 35A letter provides You are hereby informed that you have . . . the right to assert in the foreclosure proceedings the non-existence of a default or any other defense you may have to acceleration and sale.
In Massachusetts, a mortgagee may only foreclose after strictly complying with the terms of the mortgage and with the statutes relating to foreclosure of mortgages. G.L. c. 183, § 21; U.S. Bank Natl. Assn v. Ibanez, 458 Mass. 637 , 646-647 (2011); Moore v. Dick, 187 Mass. 207 , 211-212 (1905) (the manner in which the notice of [a foreclosure] sale shall be given is one of the important terms of the power [of sale] and a strict compliance with it is essential to the valid exercise of the power); Montague v. Dawes, 96 Mass. 369 , 373 (1867) (holding that one who undertakes to execute a power of sale contained in a mortgage is bound to the observance of good faith and a suitable regard for the interests of the mortgagor; and cannot shelter himself under a bare literal compliance with the conditions imposed by the terms of the power); Bottomly v. Kabachnick, 13 Mass. App. Ct. 480 , 482 (1982). A requirement of strict compliance with the terms of the mortgage pursuant to G.L. c. 183, § 21, counterbalances the substantial power Massachusetts statutory scheme affords a mortgage holder to foreclose without immediate judicial oversight. See Ibanez, 458 Mass. at 646, quoting Moore, 187 Mass. at 211. The issue is whether the notice in the § 35A letter strictly complied with paragraph 22 of the Mortgage.
This claim is foreclosed, however, because Shou and Lu are bona fide purchasers for value. If one purchases real estate in good faith for value, in ignorance of any infirmity in the title, the validity of his title will not be affected by what he afterwards learns respecting such infirmity. Flannagan v. Keefe, 250 Mass. 118 , 122 (1924). A person claiming that another is not a bona fide purchaser has the burden of proof. Richardson v. Lee Realty Corp., 364 Mass. 632 , 634 (1974). The law goes a great way in protecting the title of a purchaser for value without notice or knowledge of any defect in the power of the vendor to sell. Rogers v. Barnes, 169 Mass. 179 , 183 (1897). There are limits to the protections provided to bona fide purchasers, however, and [t]he purchaser of an apparently perfect record title is not protected against all adverse claims. Bevilacqua v. Rodriguez, 460 Mass. 762 , 778 (2011), quoting Brewster v. Weston, 235 Mass. 14 , 17 (1920). Generally, the key question in [determining whether a bona fide purchaser is protected] is whether the transaction is void, in which case it is a nullity such that title never left possession of the original owner, or merely voidable, in which case a bona fide purchaser may take good title. Bevilacqua, 460 Mass. at 778.
Some defects in the execution of the power of sale render the title void, incapable of being passed to a bona fide purchaser for value (BFP). See Ibanez, 458 Mass. at 647. Other defects in the execution of the power of sale render the title merely voidablethat is, give the foreclosed party a claim against the foreclosing mortgagee to void the mortgagees foreclosure, but no right to void the title of a BFP. See Rogers, 169 Mass. at 183-184. An example of a defect that renders a foreclosure sale void, with no title passing to a downstream BFP, is a foreclosure by a party that has not yet been assigned the mortgage. See Bevilacqua, 460 Mass. at 778, citing Ibanez, 458 Mass. at 647 (Any effort to foreclose by a party lacking jurisdiction and authority to carry out a foreclosure under [the relevant] statutes is void.).
However, a BFPs title is not to be affected by mere irregularities in executing a power of sale contained in a mortgage, of which he has no knowledge, actual or constructive. Rogers, 169 Mass. at 183-184; see also Way v. Dyer, 176 Mass. 448 , 450-451 (1900) (holding that error in advertisement for a foreclosure sale could not affect title of purchasers in good faith, and for valuable consideration, after the foreclosure, and without any knowledge, actual or constructive, of the error.); Stevenson v. Hano, 148 Mass. 616 , 617 (1889) (holding that flaws in a foreclosure advertisement did not affect title of purchaser for value, and stranger to the mortgage, who had received his deed before any complaint was made to him, unless he had notice of a want of due care on the parts of the sellers); Burns v. Thayer, 115 Mass. 89 , 93 (1874) (holding that sale after mortgagees failure to record an affidavit pursuant to the power of sale was voidable, and BFPwho bought before injured party moved to voidheld good title); Montague v. Dawes, 12 Allen 397 , 399-400 (1866).
Whether Shous and Lus status as BFPs protects them from Jennes paragraph 22 claim turns on whether the notices failure to comply with paragraph 22 of the Mortgage left the foreclosure sale void or merely voidable against a BFP. As discussed, Massachusetts mortgage law calls for strict compliance with the requirements of the statutory power of sale. Moore, 187 Mass. at 211-212. Assuming, arguendo, that Auroras notice did not comply with paragraph 22, the paragraph 22 defect makes the foreclosure sale void to any purchaser with notice of the defect. However, to a purchaser without notice of the defect (i.e., a BFP), only substantial defects such as the lack of a substantive basis to foreclose in the first place, not mere irregularities in executing a power of sale, will make a sale void. See Bevilacqua, 460 Mass. 777 -778, quoting Rogers, 169 Mass. at 183-184; Rosenberg v. Smidt, 727 P.2d 778, 783-784 (Alaska 1986). Like the notice defects in Way, 176 Mass. at 450-451, Stevenson, 148 Mass. at 617, Burns, 115 Mass. at 93, and Rosenberg, 727 P.2d at 783-784, the alleged paragraph 22 defect in this case is a mere irregularity making the foreclosure sale voidable. As such, it cannot act to void the title of BFPs. Shous and Lus BFP status protects them from Jennes paragraph 22 claim.
Jenne bears the burden to prove that Shou and Lu are not BFPs. Richardson, 364 Mass. at 634. She has made no allegation in the complaint, even after amending it, that Shou and Lu had notice of any defects in the title when they purchased the Property. Jenne has not stated a claim that the foreclosure is void because of a defect in the notice required by paragraph 22 of the Mortgage. That claim was implicitly raised in paragraph 27 of the complaint, along with the explicit claims discussed above. Because Jenne has not stated any claim, either explicitly or implicitly, in paragraph 27 of the complaint, that claim is dismissed. [Note 5]
7. Validity of the recorded chain of title
Paragraph 28 of the complaint challenges Shou and Lu as record title owners of the Property. The recorded chain of title from Jenne to Shou and Lu is as follows: Jenne to MERS by the Mortgage recorded at the registry at book 41286, page 3; from MERS to Aurora by the Assignment recorded at the registry at book 43958, page 54; from Aurora to itself by the foreclosure deed recorded at the registry at book 47168, page 309; from Aurora to Nationstar by the deed recorded at the registry at book 50295, page 35; and from Nationstar to Shou and Lu by the deed recorded at the registry at book 50400, page 162. In considering a motion to dismiss for failure to state a claim, the court does not accept legal conclusions cast in the form of factual allegations. Iannacchino v. Ford Motor Co., 451 Mass. at 633. Paragraph 28 of the complaint sets forth neither law nor facts that challenge the record title of Shou and Lu. Paragraph 28 of the complaint fails to state a claim.
8. MERSs capacity, as nominee for the lender and the lenders successors and assigns, to assign the Mortgage
In paragraphs 29 through 33 of the complaint Jenne claims that MERS had no capacity to assign the mortgage because MERS is only a nominee mortgagee who cannot act autonomously and that MERSs practices are in direct contravention of Massachusetts property and conveyance law. Compl. ¶¶ 29, 33. The Mortgage grants MERS the right to transfer the Mortgage:
Borrower understands and agrees that MERS holds only legal title to the interests granted by Borrower in this Security Instrument, but, if necessary to comply with law or custom, 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.
Mortgage at 3.
MERS had authority to assign mortgages with or without the demonstration of its principals assent. Mitchell v. U.S. Bank Natl Assn, 22 LCR 120 , 128 (2014); Abate v. Freemont Inv. & Loan, 20 LCR 630 , 635 (2012) (appeal pending, No. SJC-11638). It has authority to assign mortgages on behalf of the lender and the lender assignees, both by the terms of the mortgages, and as nominee. Mitchell, 22 LCR at 128; Abate, 20 LCR at 635. MERSs position in this case is identical to its position in Abate and Mitchell. MERS had authority to assign Jennes Mortgage both as nominee and by the terms of the Mortgage.
Jenne is without standing to look behind MERSs authority to assign the Mortgage under the terms of the Pooling and Servicing Agreement (PSA). A mortgager may challenge any assignment on the grounds that it is void or that it has been voided, but he may challenge an assignment on the grounds that it is voidable only if he is a party entitled to void the assignment. Bank of N.Y. Mellon Corp., slip op. at 2-3; Sullivan, at 85 Mass. App. Ct. at 206 & n.7; see Mitchell, 22 LCR at 129; Abate, 20 LCR at 634; see also Culhane v. Aurora Loan Servs. of Neb., 708 F.3d 282, 291 (2013); Jepson v. HSBC Bank USA, N.A., 2013 WL 639184, at *5 (D. Mass. Feb. 20, 2013). Generally, pooling and servicing agreements are contractual arrangements between a depositor, a servicer, and a trustee, to facilitate the securitization of mortgage assets. Mortgagors attacks on mortgage assignments predicated upon alleged violations of pooling and servicing agreements have been repeatedly dismissed by Massachusetts courts on the grounds that mortgagors lack standing to make such claims. Mitchell, 22 LCR at 129; Woods v. Wells Fargo Bank, N.A., 733 F.3d 349, 354 n.4 (1st Cir, 2013). A mortgagor lacks standing to void an assignment for a violation of a pooling and servicing agreement because a violated pooling and serving agreement is capable of ratification or confirmation by one with authority to do so. Mitchell, 22 LCR at 129. In most cases, a violation of a pooling and servicing agreement could only render an assignment voidable, not void. Id.
Although the complaint is vague, Jenne appears to argue that MERSs assignment of the mortgage was beyond its authority under the PSA. Jenne has no standing to make this claim because had the assignment been beyond MERSs authority under the PSA, that would merely make the assignment voidable, capable of ratification or confirmation by one with authority to do so.
Jenne asserts that MERSs practices are in direct contravention of Massachusetts property and conveyance law. The allegation that MERS has no authority, under Massachusetts law, to assign mortgages or act as a mortgagee is incorrect and fails to state a claim upon which relief can be granted. Id. at 130; see also Sullivan, 85 Mass. App. Ct. at 209, n.13; Culhane, 708 F.3d at 293.
MERS had the right to assign the Mortgage because the terms of the Mortgage instrument granted MERS that right, as did MERSs status as nominee. If the Assignment were in violation of the PSA, then Jenne would have no standing to contest the Assignment on that ground. The contractual arrangement authorizing MERS to assign mortgages within its capacity as nominee for the lender and its successors and assigns is not in contravention of Massachusetts property and conveyance laws. Paragraphs 29 through 33 of the complaint are dismissed for failure to state a claim.
For the foregoing reasons, the Aurora Motion to Dismiss and the Shou/Lu Motion to Dismiss are each hereby ALLOWED. The claim set forth in paragraph 26 of the complaint is DISMISSED WITHOUT PREJUDICE. Ann A. Jenne is hereby given leave to file an amended complaint appropriately addressing the claims set forth in paragraph 26 consistent with this Order. If Jenne does not file such an amended complaint within fourteen days of the date of this Order, then a Judgment will issue dismissing these claims with prejudice. The remaining claims set forth in the complaint are DISMISSED WITH PREJUDICE.
[Note 1] The title of the complaint references the equity jurisdiction of the Land Court, G.L. c. 185, § 1(k), the statutory power of sale, G.L. c. 183, § 21, G.L. c. 244 §§ 14, 15, the power to make a declaratory determination, G.L. c. 231A, § 1, the notice requirements of G.L. c. 244, § 35A, the statutes related to an action to try title, G.L. c. 240, §§ 1-5, the statutes related to an action to quiet title, G.L. c. 240, §§ 6-10, and foreclosure by entry or action, G.L. c. 244, § 1.
[Note 2] The version of G.L. c. 244, § 35A in force when Aurora sent the § 35A letter provided: The mortgagee, or anyone holding thereunder, shall not accelerate maturity of the unpaid balance of such mortgage obligation or otherwise enforce the mortgage because of a default consisting of the mortgagor's failure to make any such payment in subsection (a) by any method authorized by this chapter or any other law until at least 90 days after the date a written notice is given by the mortgagee to the mortgagor. St.2007, c. 206, § 11, eff. May 1, 2008, amended by St.2010, c. 258, § 7, eff. Aug. 7, 2010.
[Note 3] General Law, c. 185, § 1(k) gives the land court exclusive jurisdiction over [a]ll cases and matters cognizable under the general principles of equity jurisprudence where any right, title or interest in land is involved. G.L. c. 185, § 1(k).
[Note 4] Such a claim, of course, will be subject to any equitable defenses raised by defendants.
[Note 5] The dismissal of the claim set forth in paragraph 27 does not act as a bar to Jennes bringing a claim for damages against Aurora, Nationstar, or MERS, based on the same allegations, in a court of competent jurisdiction.