MISC 12-469306

October 7, 2016

Nantuckett, ss.



Victor Marrett and Carol Falconer (Petitioners) have lived on the property located at 3 Bailey Road in Nantucket (Property) since about March 14, 2006, when, to purchase it, they borrowed $650,000 from Ohio Savings Bank ISAOA (OSB) in exchange for a promissory note secured by a mortgage granted to Mortgage Electronic Registration Systems, Inc. (MERS). MERS purportedly assigned the mortgage to Residential Credit Solutions, Inc. (RCS) on March 15, 2011. After the Petitioners defaulted on the loan, RCS foreclosed on the Property and then afterward conveyed it to Asset Acquisition & Resolution Entity, LLC (AARE) by deed recorded January 26, 2015. Petitioners brought this action to compel RCS to try title to the Property under the Try Title statute, G.L. c. 240, §§ 1-5, contending that the original mortgage to MERS and note to OSB are null and void, along with any subsequent assignments, which caused a break in the chain of title, making the foreclosure invalid. AARE appeared, RCS disclaimed its interest, and AARE moved for summary judgment, arguing that RCS properly foreclosed and that the Petitioners’ allegations that the mortgage and assignment were invalid and the foreclosure void are baseless. As discussed further below, RCS’s foreclosure was valid, and superior title now lies with AARE. AARE’s motion for summary judgment is allowed.

Procedural History

On August 21, 2012, Petitioners filed their Petition to Compel Adverse Claimants to Try Title Pursuant to G.L. c. 240, §§ 1-5, and on September 19, 2014, Petitioners filed their Amended Petition to Compel Adverse Claimants to Try Title Pursuant to G.L. c. 240, §§ 1-5, naming RCS and MERS as respondents/adverse claimants. On December 10, 2012, RCS filed Adverse Claimants’ Answer to Petitioners’ Amended Petition and Adverse Claimants’ Crossclaim. On January 16, 2013, Petitioners filed Defendants-in-Counterclaim’s Answer and Affirmative Defenses to Plaintiffs-in-Counterclaim’s Counterclaim.

On August 22, 2014, AARE filed a Motion to Intervene and Substitute for RCS. On September 9, 2014, the Petitioners filed an Opposition to AARE’s Motion to Intervene and Substitute for RCS and the parties filed a Stipulation of Dismissal with respect to MERS. A hearing on the Motion to Intervene and Substitute for RCS was also heard on September 9, 2014. The court allowed AARE’s Motion to Intervene and Substitute with respect to its intervention and denied without prejudice with respect to its substitution for RCS. On October 6, 2014, AARE filed its Answer to Amended Petition to Compel Adverse Claimants to Try Title Pursuant to G.L. c. 240, §§ 1-5. On October 30, 2014, Petitioners filed Defendant-in-Counterclaim’s Answer and Affirmative Defenses to AARE’s Counterclaims. On November 13, 2014, AARE and RCS filed their Motion for Judgment on the Pleadings. On December 19, 2014, Petitioners filed their Opposition to AARE’s Motion for Judgment on the Pleadings. On January 9, 2015, AARE filed its Reply to Petitioners’ Opposition to the Motion for Judgment on the Pleadings. On January 15, 2015, this court denied the Motion for Judgment on the Pleadings without prejudice. On July 6, 2015, RCS filed its Disclaimer of Interest, and on August 3, 2015, filed its Amended Disclaimer of Interest.

On August 27, 2015, AARE filed its Motion for Summary Judgment (Memorandum of Law Incorporated), Statement of Facts (Resp. Facts), Exhibits Appendix (Resp. Exh.), Affidavit of Lori K. Vaulding, and Land Court Rule 4 Brief. On September 11, 2015, AARE filed Supplemental Exhibits to its Motion for Summary Judgment. On December 16, 2015, Petitioners filed their Opposition to AARE’s Motion for Summary Judgment (Pet. Opp.), Exhibits in Support of Petitioners’ Opposition (Pet. Exh.), Petitioners’ Response to AARE’s Statement of Facts (Pet. Facts) and their Additional Statement of Material Facts (Pet. Add. Facts), Affidavit of Thomas B. Vawter, and the Assented-to Motion for Leave to File Documents and Pleadings Under Seal. On January 8, 2016, AARE filed its Reply to Petitioners’ Opposition, a Motion for Leave to File Redacted Pleadings, a Motion for Leave to File Documents and Pleadings Under Seal, and its Response to Petitioners’ Additional Statement of Facts. On January 11, 2016, Petitioners filed their redacted Opposition to AARE’s Motion for Summary Judgment, their redacted Response to AARE’s Statement of Facts and Their Additional Statement of Material Facts. The court allowed AARE’s Motion for Leave to File Redacted Pleadings and AARE’s Motion for Leave to File Documents and Pleadings Under Seal. On January 12, 2016, a hearing on AARE’s Motion for Summary Judgment was held and the motion was taken under advisement. This Memorandum and Order follows.

Summary Judgment Standard

Summary judgment may be entered if the “pleadings, depositions, answers to interrogatories, and responses to requests for admission . . . together with the affidavits . . . show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Mass. R. Civ. P. 56(c). In viewing the factual record presented as part of the motion, the court draws “all logically permissible inferences” from the facts in favor of the non-moving party. Willitts v. Roman Catholic Archbishop of Boston, 411 Mass. 202 , 203 (1991). “Summary judgment is appropriate when, ‘viewing the evidence in the light most favorable to the nonmoving party, all material facts have been established and the moving party is entitled to a judgment as a matter of law.’” Regis College v. Town of Weston, 462 Mass. 280 , 284 (2012), quoting Augat, Inc. v. Liberty Mut. Ins. Co., 410 Mass. 117 , 120 (1991). Where the non-moving party bears the burden of proof, the “burden on the moving party may be discharged by showing that there is an absence of evidence to support the non-moving party’s case.” Kourouvacilis v. General Motors Corp., 410 Mass. 706 , 711 (1991); see Regis College, 462 Mass. at 291-292.

Undisputed Facts

Based on the pleadings and the documents submitted with the motion for summary judgment and opposition, the following facts are undisputed or deemed admitted:

1. Petitioners reside at 3 Bailey Road in Nantucket (Property), their primary residence since they were conveyed the Property as joint tenants by deed dated March 14, 2006 and recorded on March 15, 2016 in the Nantucket County Registry of Deeds (registry) at Book 1011, Page 79. In connection with their acquisition of the Property, Petitioners executed a HUD-1 Settlement Statement on March 14, 2006. Pet. Facts, ¶ 1; Pet. Add. Facts, ¶¶ 1-2; Pet. Exh. B; Resp. Facts, ¶ 1; Resp. Exh. A.

2. The HUD-1 Settlement Statement states that the Petitioners obtained a loan for $650,000 in exchange for a promissory note (Note), signed and initialed by Petitioner Carol Falconer (Falconer) and initialed by Petitioner Victor Marrett (Marrett) on or about March 14, 2006. OSB was listed as the Lender on the Note, and Falconer was listed as the Borrower. Pet. Exh. A; Resp. Exhs. A-B, L at p. 16; Pet. Facts, ¶¶ 2-3, 5; Resp. Facts, ¶¶ 2-3, 5.

3. Attorney Jamie Ranney, the settlement agent, executed the HUD-1 Settlement Statement on March 14, 2006, certifying that he “[has] caused or will cause the funds to be disbursed in accordance with this statement.” Pet. Facts, ¶ 4; Resp. Facts, ¶ 4; Resp. Exh. A.

4. To secure the loan, the Petitioners granted a first priority mortgage (Mortgage) on the Property to MERS, acting as a nominee for the Lender, OSB. The Mortgage was recorded with the registry on March 15, 2006 at Book 1011, Page 81. Pet. Facts, ¶ 6; Resp. Facts, ¶ 6; Resp. Exh. C.

5. Falconer signed a Name Affidavit that she is the same person named as the Borrower in the Note and Mortgage. Resp. Exh. B.

6. At her deposition, Falconer testified that she obtained the $650,000 loan from OSB, which she used for the purchase of the Property. Falconer did not dispute that OSB was the Lender under the Note and Mortgage. Falconer stated that she had no evidence to show that the Mortgage was obtained from any other entity other than OSB. Pet. Facts, ¶ 16; Resp. Facts, ¶ 16; Resp. Exh. L at pp. 21-22, 46-47.

7. On or about August 30, 2010, RCS, authorized by and acting as the mortgage servicer for Am-trust-np Sfr Venture LLC, Spo3 (Am-Trust) [Note 1], the then-mortgagee of the Note (derived from the loan originating from OSB), mailed Petitioners a right to cure notice (Notice). The Notice states that the Petitioners are in default under the terms of the Note for failure to pay the required installments when due and have until January 27, 2011 to pay the amount due or RCS “shall accelerate the entire sum of both principal and interest due and payable, and may take steps to terminate [the Petitioners’] ownership in the property by a foreclosure proceeding or other action to seize the home.” The total amount due as of the date of the Notice is stated as $33,617.70. Pet. Facts, ¶ 7; Resp. Facts, ¶ 7; Resp. Exh. D.

8. On or about February 17, 2011, Attorney Joshua Ryan-Polczinski (Ryan) of Harmon Law Offices, P.C. (HLO), as legal counsel for RCS, the then-mortgage servicer, mailed Petitioners a notice informing them that HLO “[has] been instructed to bring a foreclosure in the name of [RCS] under the Power of Sale contained in your mortgage,” because Petitioners were in breach of the conditions of the loan documents and that the Note had been accelerated. Pet. Facts, ¶ 8; Pet. Add. Facts, ¶ 4; Resp. Facts, ¶ 8; Resp. Exh. E.

9. On March 15, 2011, MERS, the current holder of the Mortgage, executed an assignment of the Mortgage (Assignment) to RCS that was notarized on the same date by notary public Natalie Flowers. Alicia Wood, acting as Assistant Secretary for MERS, signed the Assignment. The Assignment was recorded in the registry at Book 1273, Page 260, on March 25, 2011. Pet. Facts, ¶ 9; Resp. Facts, ¶ 9; Resp. Exh. F.

10. On or about October 12, 2011, Attorney Ryan, from HLO, on behalf of RCS, the now-mortgagee, mailed to Petitioners the Notice of Mortgage Foreclosure Sale. Pet. Facts, ¶ 10; Resp. Facts, ¶ 10; Resp. Exh. G.

11. On October 20, 2011, October 27, 2011, and November 3, 2011, HLO, on behalf of RCS, published the Legal Notice of Mortgagee’s Sale of Real Estate in the Nantucket Inquirer and Mirror, Inc., a newspaper with general circulation in Nantucket, MA. The Legal Notice of Mortgagee’s Sale of Real Estate was recorded in the registry at Book 1318, Page 272. Pet. Facts, ¶ 11; Resp. Facts, ¶ 11; Resp. Exhs. G, H.

12. On November 17, 2011, a foreclosure auction of the Property was held, at which RCS was the highest bidder. Alicia Wood, acting as Vice President of RCS, signed the foreclosure deed, which was notarized by a notary public on March 14, 2012 and recorded on March 22, 2012 in the registry at Book 1318, Page 268. According to the foreclosure deed, RCS paid $600,000 in consideration for the Property. Pet. Facts, ¶ 12; Pet. Add. Facts, ¶¶ 5-8; Resp. Facts, ¶ 12; Resp. Exh. I.

13. Attorney Ryan, from HLO, executed a post-sale affidavit on March 9, 2012, and recorded it in the registry at Book 1318, Page 270 along with the foreclosure deed. Ryan’s affidavit is based on his review of the documents related to the foreclosure. All documents submitted by AARE in support of its motion for summary judgment state that RCS was the holder of the Mortgage at the time of foreclosure. Pet. Add. Facts, ¶¶ 3, 182; Pet. Exh. U, at pp. 21-26; Resp. Exh. I.

14. On January 26, 2015, RCS conveyed title to the Property to AARE by deed recorded in the registry at Book 1470, Page 111. Pet. Facts, ¶ 13; Resp. Exh. J.


The Try Title statute, G.L. c. 240, §§ 1-5, was first enacted in 1851 and amended to roughly its current form in 1893. St. 1851, c. 233, § 66; St. 1893, c. 240; see Bevilacqua v. Rodriguez, 460 Mass. 762 , 767-769 (2011); Abate v. Fremont Inv. & Loan, 20 LCR 630 , 632 (2012), aff’d, 470 Mass. 821 (2015) (Abate I). The statute provides that a plaintiff may bring a try title action if the plaintiff is in possession of property to which it holds record title that is clouded by an actual or possible adverse claim. G.L. c. 240, § 1; Abate v. Fremont Inv. & Loan, 470 Mass. 821 , 827 (2015) (Abate II); Bevilacqua, 460 Mass. at 766, 767 n.5. Under the statutory scheme, the plaintiff in possession with record title files a complaint naming as defendant the person or entity claiming superior title. The complaint demands that the adverse claimant appear and show cause why it should not bring an action to establish its superior title. G.L. c. 240, § 1. If the defendant fails to appear or fail to bring a claim, a judgment may enter that the defendant “be forever barred from having or enforcing any such claim adversely to the petitioners.” G.L. c. 240, § 2. If the defendant does appear, it may either disclaim any interest or bring an action to try its claim to superior title. G.L. c. 240, § 3; see Bevilacqua, 460 Mass. at 766.

Try title actions are brought exclusively in the Land Court. G.L. c. 185, § 1(d). Actions in this court, including try title actions, are governed by the Massachusetts Rules of Civil Procedure. Abate II, 470 Mass. at 828 n.17; Mass. R. Civ. P. 1. Thus, a defendant in a try title action may exercise its right, when appropriate, to bring a motion to dismiss for lack of subject matter jurisdiction or for failure to state a claim. Mass. R. Civ. P. 12(b)(1), 12(b)(6). In particular, a defendant may move to dismiss for lack of standing on the grounds that the plaintiff has not met the jurisdictional requirements of possession or holding record title. Abate II, 470 Mass. at 827- 828, 830. If the defendant does not move to dismiss or if the plaintiff’s complaint survives a motion to dismiss, the defendant must then bring an action to try its title. This action may be brought as a counterclaim. G.L. c. 240, § 3; Mass. R. Civ. P. 13; Abate I, 20 LCR at 632 n. 5. The counterclaim serves as the action to try title. The plaintiff can then file a reply to the counterclaim that denies the allegations that the defendant holds superior title and raise any affirmative defenses that are appropriate.

This is a post-foreclosure try title action in which the Petitioners allege that they have record title and possession and that RCS, the foreclosing mortgagee, is claiming superior title by virtue of its foreclosure. The foreclosure establishes that RCS is making such an adverse claim. Abate II, 470 Mass. at 834-835. RCS, the original defendant, did not move to dismiss on the grounds that the Petitioners did not have possession or record title. Instead, RCS appeared and filed a counterclaim to try its title. MERS disclaimed. After RCS conveyed the Property to AARE, RCS disclaimed and AARE brought a counterclaim to try its title. It is AARE’s counterclaim to establish its title to the Property that is the subject of this Motion for Summary Judgment. AARE’s claim to superior title is that RCS held the mortgage at the time of foreclosure and conducted the foreclosure properly under G.L. c. 244, § 14. The burden is on AARE to establish its superior title by showing that, based on the undisputed evidence and as a matter of law, that RCS held the mortgage by a recorded assignment, that the foreclosure was performed in accordance with G.L. c. 244, § 14, and that AARE holds title by a deed from RCS. If AARE establishes those prerequisites, then the court can address the merits of the Petitioners’ claims that the assignment to RCS was not valid. If, based on the summary judgment record, RCS is found to have held the mortgage and the foreclosure is found to have been valid, then the Petitioners will have been deprived of record title at the time of the foreclosure and will therefore lack standing to challenge the deed from RCS to AARE. As a result, AARE will have established its title by the deed from RCS to AARE. The court addresses these elements in turn.

I. Validity of the Foreclosure Proceedings and Post-Foreclosure Affidavit

The undisputed facts, including the exhibits attached to the motion for summary judgment and opposition, show that the foreclosure proceedings were conducted in accordance with G.L. c. 244, § 14, and that RCS held the Mortgage at the time of the foreclosure sale. The chain of assignments for the Mortgage was unbroken. The Mortgage was originally granted to MERS, as nominee of OSB on March 15, 2016. It was then assigned by MERS to RCS on March 15, 2011. On or about October 12, 2011, Attorney Ryan, from HLO, on behalf of RCS, mailed to Petitioners the Notice of Mortgage Foreclosure Sale. On October 20, 2011, October 27, 2011, and November 3, 2011, HLO, on behalf of RCS, published the Legal Notice of Mortgagee’s Sale of Real Estate in two newspapers with general circulation in Nantucket. The Legal Notice of Mortgagee’s Sale of Real Estate was also recorded in the registry at Book 1318, Page 272. On November 17, 2011, a foreclosure auction of the Property was held, at which RCS was the highest bidder. The foreclosure deed to RCS was recorded on March 22, 2012 in the registry at Book 1318, Page 268. Recorded along with the foreclosure deed was a post-sale affidavit, executed in accordance with G.L. c. 244, § 15 by HLO as counsel for RCS on March 9, 2012. Thereafter, title to the Property transferred to AARE when RCS deeded the Property to them on January 26, 2015 and recorded the deed in the registry at Book 1470, Page 111.

Petitioners maintain that RCS failed to make a prima facie showing of its right to possession of the premises. While acknowledging that a prima facie showing of a right to possession may be established by producing an attested copy of the foreclosure deed and affidavit of sale under G.L. c. 244, § 15, they argue that the post-foreclosure affidavit executed by Ryan, an attorney from HLO, failed to comply with § 15 for several reasons: (1) Ryan was never “duly authorized by a writing” of “the person selling,”; (2) Ryan testified that he never saw a document wherein RCS authorized him to sign the affidavit; (3) the Affidavit was not based upon his personal knowledge, only documents that he reviewed; (4) Ryan did not know whether the loan was in default; (5) Ryan was not present at the foreclosure sale of the Property; and (6) Ryan testified that he had no evidence that he personally sent out the G.L. c. 244, § 14 notices.

Petitioners rely on Federal Nat’l Mtge. Ass’n v. Hendricks, 463 Mass. 635 (2012), to claim that while an affidavit that is facially compliant with § 15 may be considered prima facie evidence that the foreclosure proceedings were done is in accordance with G.L. c. 244, § 14, the court is not bound to accept its sufficiency. Id. at 641 (“An affidavit that meets the requirements of G.L. c. 244, § 15, does nothing more. Such an affidavit is not conclusive proof of compliance with G.L. c. 244, § 14. It is merely ‘evidence that the power of sale was duly executed.’”), quoting G.L. c. 244, § 15. They also point to the decision in HSBC Bank USA, Nat’l Ass’n v. Galebach, No. 12-ADMS-10001, 2012 WL 3580281 (Mass. App. Div. June 29, 2012), in which the court determined that although facially compliant with § 15, the affidavit was not prima facie evidence of a proper foreclosure pursuant to G.L. c. 244, § 14 where the acts recited in the foreclosure affidavit were done by someone other than the affiant themselves and not on any personal knowledge as required by Mass. R. Civ. P. 56. Id. at *2-4.

Though Hendricks does contain the language cited to by the Petitioners, it does not stand for the proposition they believe it does, but actually the opposite. Hendricks, 463 Mass. at 641- 642 (finding that “statutory form constitute[s] prima facie evidence of the right of possession”). Galebach was thus impliedly overruled by Hendricks, which was subsequently decided the same year, and Galebach was recently abrogated by HSBC Bank USA, Nat’l Ass’n v. Howe, No. 15- ADMS-10016, 16 WL 797622 at *4-5 (Mass. App. Div. Feb. 19, 2016). In Howe, the court noted that while they “took issue with such non-first person recitations” in Galebach, the SJC later decided Hendricks, which held that “an uncontroverted affidavit attesting to the statutory form ‘Affidavit of Sale under Power of Sale in Mortgage,’ G.L. c. 183, § 8, & Appendix Form 12 (statutory form), is sufficient to show compliance with the power of sale for the purpose of establishing the right of possession by motion for summary judgment.” Id. at *4. “Where [a] challenge is focused on an affidavit of sale that is defective on its face, a defendant needs no other evidence to proceed with his challenge. . . . However, where the affidavit of sale is in the statutory form or meets the particular requirements of § 15, a plaintiff has made a prima facie case.” Hendricks, 463 Mass. at 635-636, 642. The decision in Howe also distinguished the deficiencies with the affidavit in Galebach, as being based entirely on hearsay and not what the affiant or their employer did. Howe, 16 WL 797622 at *4, n. 13. The court held that so long as the affiant can attest to their employer’s actions, the fact that an affidavit recites acts of a third party for whom the affiant is working, rather than those of affiant himself, does not render the affidavit insufficient. Id. at *4-5.

Attorney Ryan’s affidavit does not materially differ from the affidavits that were deemed sufficient in Howe and Hendricks. Ryan’s law firm, HLO, was active counsel for RCS at the time of foreclosure. RCS, as mortgagee, had the right to exercise its statutory power of sale. The affidavit indicates that RCS was acting as the foreclosing entity while Ryan was acting as RCS’s attorney. “[A]n authorizing instrument is unnecessary where ‘the mortgagee, conducted the foreclosure with the assistance of attorneys who acted on its behalf.’” Id. at *5, quoting Federal Nat’l Mtge. Ass’n v. Rogers, No. 13-ADMS-10025, 2015 WL 2000845 at *4 (Mass. App. Div. March 21, 2014); see also Federal Nat’l Mtge. Ass’n v. Rego, 474 Mass. 329 , 330-331 (2016) (concluding that “legal counsel may perform the acts at issue in this case without written authorization, as the ‘person acting in the name of such mortgagee.’”), quoting G.L. c. 244, § 14. The affidavit at issue is simply a third-person permutation of the statutory short form found at G.L. c. 183, § 8 and Appendix Form 12. Resp. Exh. I. This permutation is permissible because “[the forms] may be altered as circumstances require.” Howe, 16 WL 797622, at *5, quoting G.L. c. 183, § 8. Ryan testified at his deposition that, as a necessary part of his procedure in executing affidavits of sale, he verifies all of the facts or events that are recited in the affidavit, and in this foreclosure, he attached to the affidavit a copy of the Legal Notice of Mortgagee’s Sale of Real Estate that was circulated in the Nantucket Inquirer and Mirror, Inc. for three consecutive weeks. Pet. Exh. U at pp. 20-21; Resp. Exh. I. In view of that, Ryan’s affidavit was sufficient pursuant to G.L. c. 244, § 15, and his review and confirmation of the facts and documents establish his competence to testify as to RCS’s strict compliance with G.L. c. 244, § 14. The required documents that prove compliance—the foreclosure deed, affidavit, and tear sheet—were also recorded in the registry. Resp. Exh. I.

AARE has shown that the foreclosure conformed with G.L. c. 244, § 14, and the Petitioners have presented no evidence that challenges the foreclosure process. Based on the undisputed facts, AARE has established as a matter of law its prima facie claim that it holds title to the Property through the foreclosure by RCS and RCS’s deed to AARE. The burden now shifts to the Petitioners to establish or to raise an issue of fact that the foreclosure was void. The Petitioners argue that the foreclosure was void for the various reasons set forth in their Amended Petition. These substantive arguments that the foreclosure is void are now addressed.

II. The Original Lender

Petitioners allege that OSB was not the original “Lender” of the Note and Mortgage and, therefore, the Mortgage was never valid and enforceable. Petitioners argue that AARE has not produced any competent or admissible evidence to show that OSB is in fact the original Lender. As a result, Petitioners claim they never had an obligation to OSB or any of its assignees, and its assignees had no authority to enforce the provisions of the Note, including the statutory power of sale to foreclose. Pet. Opp., at pp. 2, 11-12.

Despite the Petitioners’ contentions, the overwhelming weight of the undisputed evidence is that OSB was the original Lender on the Mortgage and Note that Petitioners used to fund their purchase of the Property. Both the Mortgage and the Note state that OSB is the Lender and the Petitioners are the Borrowers. The Mortgage bears both Falconer’s and Marrett’s initials and signature, and the Note bears Falconer’s signature and Marrett’s initials. Resp. Exhs. B-C. In her deposition, Falconer acknowledged that she obtained the Mortgage from OSB and could not show that she obtained it from any other entity. Resp. Exh. L at pp.15-22. Petitioners ask the court to engage in speculation as to the true Lender due to the “insufficient knowledge” available in the face of immense documentary evidence to the contrary and their own admission that they executed the Note, obtained the Mortgage to secure the loan, and actually received the loan used to pay for the purchase of the Property. Petitioners challenge the material evidence and testimony as insufficient or inadmissible, but present no evidence supporting the existence of any different Lender other than OSB. Speculation in the absence of evidence does not create an issue of material fact. This allegation is unsupported and without merit.

III. Status of the Note at Foreclosure

Petitioners also make various allegations regarding the history of the Note after its origination that they claim render the Note unenforceable and the foreclosure on the Property void: (1) the Note and allonge produced by AARE, together with the endorsements on it, are void and unenforceable because the allonge is not attached or affixed to the Note, nor are the pages of the Note affixed to each other; (2) the allonge is a fabricated recent contrivance; and (3) after Petitioners executed the Note, it was sold, transferred, and/or assigned to multiple unknown parties so that there is no clear chain of custody, and that those transfers were unlawful. Pet. Opp., at pp. 12-16. Since according to the Petitioners, the Note was not properly held by RCS at the time of the foreclosure, they maintain that RCS had no authority to conduct the foreclosure proceedings on the Property.

In Eaton v. Fed. Nat’l Mtge. Ass’n, 462 Mass. 569 (2012), the Supreme Judicial Court (SJC) held that in order to perform a valid foreclosure, the foreclosing entity had to hold both the mortgage and the mortgage note, or act in the capacity of the noteholder’s agent. Id. at 586-589. The SJC, however, made clear that this requirement would only apply prospectively, to foreclosure proceedings that occurred after June 22, 2012, the date of its decision. Id.

Here, the foreclosure on the Property’s predated the Eaton decision by about seven months, occurring on November 17, 2011. For that reason, AARE must only establish a clear chain of title for the Mortgage, evidencing that their predecessor-in-interest, RCS, had the authority to foreclose on Petitioners. See U.S. Bank Nat’l Ass’n v. Ibanez, 458 Mass. 637 , 651 (2011) (holding that a foreclosing party may produce either a complete chain of mortgage assignments or a single assignment from the record holder of the mortgage). Though Petitioners’ claim that pre-Eaton foreclosures still had to reference an interest in the associated note, their assertions rely on inapplicable case law and treatises rather than a plain language of the Eaton decision. See Pet. Opp., at p. 16. AARE has established the Mortgage’s chain of title, originating with MERS, as nominee for OSB, then passing to RCS. This is sufficient to demonstrate RCS’s legal right to foreclose on the Property.

Petitioners’ allegations of the allonge’s fraudulent contrivance do not rise above “mere allegations” and lack supporting material evidence. See Mass. R. Civ. P. 56(e). Allegations of fraud must be “stated with particularity,” but Petitioners rely on speculation regarding the allonge’s production. Mass. R. Civ. P. 9(b); Pet. Opp., at p. 13-14. The treatment of the Note since its execution, therefore, does not invalidate AARE’s claim to record title.

IV. MERS’s Legal Title to the Property

Petitioners next contend that under Massachusetts title theory law, and MERS’s own rules, MERS is prohibited from possessing the Mortgage as the mortgagee, acting as nominee for the Lender OSB. They assert that MERS was structured only to accommodate the tracking of mortgage loans, and not for the purpose of holding title in properties themselves. See Pet. Opp., at pp. 19-33. Petitioners rely on an array of evidence, including Congressional testimony from MERS’s creators, changes to the standardized mortgage form known as “MASSACHUSETTS- Single Family-Fannie Mae/Freddie Mac UNIFORM INSTRUMENT Form 3022 1/01” resulting from the advent of MERS, and the MERS Integration Handbook. Pet. Exhs. L, M, O. These allegations and the evidence supporting them recede in the face of established Massachusetts law.

Massachusetts is a title-theory state, meaning that the title interest in a mortgaged property is split between the mortgagor and the mortgagee. Abate II, 470 Mass. at 832 (stating that mortgagee holds legal title while mortgagor holds an equitable interest in the property). Massachusetts courts have found that MERS may hold and assign mortgages. Shea v. Federal Nat’l Mtge. Ass’n, 87 Mass. App. Ct. 901 , 902-903 (2015); Haskins v. Deutsche Bank Nat’l Trust Co., 86 Mass. App. Ct. 632 , 642 (2014); Sullivan v. Kondauer Capital Corp., 85 Mass. App. Ct. 202 , 208-210 (2014); see Culhane v. Aurora Loan Servs. of Nebraska, 708 F.3d 282, 293 (1st Cir. 2013) (“MERS’s role as mortgagee of record and custodian of the bare legal interest as nominee for the member-noteholder, and the member-noteholder’s role as owner of the beneficial interest in the loan, fit comfortably with each other and fit comfortably within the structure of Massachusetts mortgage law.”). [Note 2] Despite Petitioners’ interpretation of MERS’s intended function, it is plain that MERS’s authority as mortgagee in possession of legal title to the Property was valid and enforceable.

V. Allegations of Assignment Invalidity

In paragraph 20 of the Amended Petition and in their opposition, Petitioners assert that the Assignment by MERS to RCS was invalid and void for numerous stated reasons. See Pet. Opp., at pp. 3-4. While some of those reasons—as they pertain to the original loan, the Note history, and MERS’s right to hold legal title—have already been addressed, the remaining arguments supporting the allegation are examined below.

In paragraph 20.d and 20.e, Petitioners argue that MERS did not have authority to assign the Mortgage to RCS because they were merely an agent on behalf of an unidentified principal, thus, MERS cannot assign a mortgage on its own and in its own name. Just as State law explicitly supports MERS’s right to legal title of a mortgage, it supports its independent right to assign a mortgage if granted that power in the mortgage documents. See Sullivan, 85 Mass. App. Ct. at 209-210 (“MERS had the authority to assign the Mortgage without identifying its principal or further demonstrating its authority.”); Mitchell, 22 LCR at 128. The Mortgage states 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,” and that MERS has a right to assign its interest, “with power of sale.” Resp. Exh. C. “As it did in Abate, MERS had authority to assign the Mortgage, with or without the demonstration of its principal’s assent.” Mitchell, 22 LCR at 128, citing Abate I, 20 LCR at 635. By the express terms of the Mortgage, MERS was acting on behalf of the Lender, OSB, in executing the Assignment and was well within its authority to do so as nominee for the Lender. See id., citing Deutsche Bank Nat’l Trust Co. v. Cicchelli, 19 LCR 461 , 463 (2011). “In Massachusetts, MERS generally may assign mortgages for which MERS is the mortgagee, as holder of legal title, and may do so despite not holding the note.” Id.; see Kiah, 2011 WL 841282, at *8; In re Lopez, 446 B.R. at 18–19. MERS had the authority to assign the Mortgage to RCS without identifying its principal or further demonstrating its authority.

In paragraph 20.f, Petitioners allege that the Assignment fraudulently attempts to conceal the actual holder of the Mortgage, and in paragraph 20.g that the Assignment fraudulently attempts to conceal the date of the securitization of Petitioners’ loan and its sale to third-parties. Pet. Opp., at p. 3. As previously noted, allegations of fraud must be “stated with particularity.” Mass. R. Civ. P. 9(b). Petitioners do not present any particular facts to support these allegations. They do not suggest dates when the frauds occurred, the perpetrator or perpetrators of the frauds, or even facts to show that the Note was in fact securitized.

Petitioners claim in paragraph 20.i that the Assignment is void for lack of a corporate seal. As addressed by this court in Abate I, G.L. c. 183, § 1A, provides that “[n]o instrument purporting to affect an interest in land shall be void because it is not sealed or does not recite a seal.” Abate I, 20 LCR at 635-636, quoting G.L. c. 183, § 1A. Thus, even without a corporate seal, the Assignment’s validity is unaffected.

Another argument Petitioners make, in paragraph 20.j, is that the Assignment fails for lack of consideration under G.L. c. 183, § 6. This court has stated on numerous occasions that § 6 applies to deeds, not assignments, and “non-compliance does not affect the validity of any deed.” Abate I, 20 LCR at 635; see Campbell, 23 LCR at 647.

Likewise, in paragraph 20.k, the Petitioners insist that the Assignment does not comply with G.L. c. 183, § 6D, because it fails to list the mortgage broker or originator. Although § 6D states that an assignment of a mortgage must contain or have endorsed upon it the name and address of the mortgage broker and the loan originator, if applicable, it also states that “[f]ailure to comply with this section shall not affect the validity of any mortgage or assignment of a mortgage or the recording thereof.” G.L. c. 183, § 6D. This court has decided multiple times against any statutory interpretation contrary to the plain meaning of the statute. See Campbell, 23 LCR at 647; Mitchell, 22 LCR at 128; Abate I, 20 LCR at 635.

Petitioners next claim in paragraph 20.l-20.n that the Assignment was invalid pursuant to G.L. c. 183, § 30, because Alicia Wood did not personally appear before the notary public, that she was not authorized under G.L. c. 183, § 54B to execute the Assignment on behalf of MERS, and that she did not hold the position of Assistant Secretary of MERS, as claimed. Even after discovery, the Petitioners present no evidence to question any aspect of the notarization of the Assignment. The Assignment bears the signature of the Notary Public and states that Ms. Wood personally appeared before her. Resp. Exh. F. It thus satisfies the criteria for an acknowledgement of a deed made outside the Commonwealth and is presumptively valid under G.L. c. 183, § 54B. Abate I, 20 LCR at 636. Further, G.L. c. 183, § 54B, only requires that the person executing the assignment before the notary public purport “to hold the position of . . . vice president, . . . secretary, . . . [or] assistant to any such position” in order for the execution to be valid. G.L. c. 183, § 54B; Campbell, 23 LCR at 647. Ms. Wood purports to hold the duly authorized position of Assistant Secretary for MERS, and Petitioners “cannot look behind that authority.” Mitchell, 22 LCR at 131. The Assignment facially meets the requirements of § 54B and there is no evidence otherwise. The Assignment was executed in accordance with G.L. c. 183, § 30.

Without basis, Petitioners allege in paragraph 20.o that the Assignment violated the terms of any mortgage-backed security in which the Mortgage may have been pooled. As with many of their other allegations, Petitioners provide no facts to show that the Note was ever securitized or any indication of what terms the Assignment violated. Thus, they fail to carry this argument beyond the point of speculation.

In paragraph 20.p, Petitioners point to the Assignment’s recordation in the registry, stating that was in violation of G.L. c. 266, § 35A, which provides for criminal sanctions for acts of fraud or fraudulent omissions during the mortgage lending process. Because the Assignment was valid and Petitioners again do not allege this claim with particularity or present any evidence of knowing or intentional fraud, its recording was not a false material statement in violation of the statute. See G.L. c. 266, § 35A; Mass. R. Civ. P. 9(b).

Petitioners additionally aver in paragraph 20.q that the Assignment violates IRS REMIC rules governing mortgage-backed securities. As with their prior claims, Petitioners do not present any evidence that the Assignment was securitized and fail to indicate which rules the Assignment violated. Since there can be no violation of a REMIC rule without securitization, this argument falls flat.

A mortgagor has the right to challenge the validity of a mortgage assignment where the assignment is void, not merely voidable by a party to the Assignment. Thus, a mortgagor can assert that the assignor’s lack of legal authority rendered the assignment void, but cannot challenge an assignment that is in some way deficient, but otherwise legal because such an assignment is only voidable by the parties to the assignment. Bank of N.Y. Mellon Corp. v. Wain, 85 Mass. App. Ct. 498 , 502 (2014), citing Sullivan, 85 Mass. App. Ct. at 206 n. 7; Campbell, 23 LCR at 647-648. Because Petitioners do not present evidence showing that the Assignment was void, they lack standing to challenge the assignment even if their allegations had merit. For all the reasons stated above, the Assignment was valid, and RCS had the authority to foreclosure under the terms of the Mortgage.

VI. Bifurcation of the Note and Mortgage

Petitioners next present the argument that the Note and Mortgage were split sometime after Petitioners executed the loan documents on March 15, 2006, and that this split breached the terms of paragraph 20 of the Mortgage. Paragraph 20 is entitled “Sale of note; Change of Loan Servicer; Notice of Grievance.” Resp. Exh. C. The language contained in paragraph 20 is identical to that found in both the Mitchell and Abate I decisions. See Mitchell, 22 LCR at 123; Abate I, 20 LCR at 637. As this court stated then and restates now, there is nothing ambiguous in this provision, and when construed in accordance with its plain meaning, paragraph 20 does not require that the Note and Mortgage be assigned together. Mitchell, 22 LCR at 123-24; Abate I, 20 LCR at 637. The bifurcation of the Note and Mortgage did not violate the contractual terms.

VII. Right to Cure Notice under G.L. c. 244, § 35A

Petitioners contend that the foreclosure sale of the Property was invalid and that the foreclosure deed is consequently void because the August 30, 2010, right to cure Notice sent by RCS failed to strictly comply with G.L. c. 244, § 35A. They state that the Notice was deficient because it was dated approximately seven months before the Assignment by MERS to RCS, and that RCS was not the mortgagee of the loan or an agent of MERS. They further allege that AARE was required to show who held the interest in the Note at the time that the Notice was mailed so that Petitioners would know who to pay. Pet. Opp., at pp. 34-35.

In U.S. Bank Nat’l Ass’n v. Schumacher, 467 Mass. 421 (2014), the court was faced with deciding whether G.L. c. 244, § 35A was part of the foreclosure process itself and if so, whether a mortgagee’s failure to strictly comply with its notice provisions rendered the foreclosure sale void. Id. at 422. The mortgagor contended that the notice provisions of § 35A were incorporated into the statutory power of sale in G.L. c. 183, § 21. The SJC disagreed, finding that § 35A was not one of the statutes relating to foreclosure, and thus, failure to strictly comply with § 35A was not grounds for voiding an otherwise valid foreclosure in a post-foreclosure action. The concurring opinion of Justice Gants, which was fully endorsed by the majority, id. at 429 n.12, set forth a standard for challenging the adequacy of written notice in the post-foreclosure context. In his concurrence, Justice Gants stated that a mortgagor could invalidate a foreclosure sale “for reasons other than failure to comply strictly with the power of sale provided in the mortgage” if the mortgagor is able to demonstrate “that the violation of the § 35A rendered the foreclosure so fundamentally unfair that [they are] entitled to affirmative equitable relief.” Id. at 432-433 (Gants, J., concurring), quoting Bank of Am., N.A. v. Rosa, 466 Mass. 613 , 624 (2013).

Schumacher does not explicitly set out what constitutes fundamental unfairness. At a minimum, however, to establish fundamental unfairness the Petitioners would need to present facts indicating that deficiencies in the Notice sent by RCS thwarted, in some manner, their effort to cure their default. See Id. at 431 (stating that the purpose of § 35A is to give the mortgagor a “fair opportunity” to cure the default before acceleration). On August 30, 2010, RCS mailed Petitioners the Notice, giving them 150 days to cure the default. RCS followed suit with an acceleration letter dated February 17, 2011, over 150 days later and within the parameters set by the statute. Resp. Exhs. D-E; see G.L. c. 244, § 35A(b); Schumacher, 467 Mass. at 432. Petitioners have failed to present any evidence of an effort on their part to address their default such as refinancing the loan (a right granted by § 35A(c)(10)(i)), contacting the Homeownership Counseling service as suggested in the notice, making good-faith payments on the debt, or otherwise attempting to contact RCS to discuss the default. Since they have offered nothing to suggest that they were not deprived of a “fair opportunity” to cure the default, this claim is also unsuccessful.

Moreover, as was thoroughly discussed in Haskins v. Deutsche Nat’l Trust Co., 86 Mass. App. Ct. 632 (2014), RCS need not be the mortgagee or MERS’s agent to send the mortgagor a valid right to cure notice, and it need not identify who owned the Note at the time the Notice was sent. Id. at 641. RCS was acting in its capacity as loan servicer for Am-Trust, the mortgagee of the Note at the time. Resp. Exh. D. Because the purpose of § 35A is to provide the mortgagor with the information necessary to make curative payments, “it is sensible to consider the servicer within the scope of the parties encompassed by the term ‘mortgagee’ in § 35A(h)(4).” Id. The statute’s purpose is not “furthered by furnishing the mortgagor with the name and address of the mortgagee in circumstances where the loan is serviced by a different entity. . . . all relevant information concerning the loan and all communications with the mortgagor will be with the servicer.” Id. The Notice provided Petitioners with an address and telephone number to contact RCS if they chose to cure their default, which they did not do. Even if the Petitioners had attempted to cure the default, the right to cure Notice was not so defective as to be fundamentally unfair to Petitioners.

VIII. Right to Cure Notice under Paragraph 22 of the Mortgage

The Petitioners make a similar argument that because the language in the right to cure Notice did not strictly comply with the pre-foreclosure language of paragraph 22 of the Mortgage and was not issued by the Lender, the foreclosure deed is void. The language in the Notice sent to Petitioners states in relevant part:

You are hereby informed that you have the right to “cure” or reinstate the loan after acceleration and the right to assert in the foreclosure proceeding the non- existence of a default or any other defense you may have to acceleration and sale.

Resp. Exhibit D. Petitioners mistakenly rely on Pinti v. Emigrant Mtge. Co., Inc., 472 Mass. 226 (2015) in which the SJC discussed a notice to cure’s compliance with paragraph 22 at length.

In Pinti, plaintiff-mortgagors brought an action against the mortgagee and purchaser of property at a foreclosure sale, seeking a declaration that the sale was void. The primary argument as to why the foreclosure was void was that the mortgagee had failed to comply with paragraph 22 of the mortgage, which concerns the mortgagee’s provision of notice to the mortgagor of default and the right to cure. Paragraph 22 provides that the notice must inform the mortgagor “of the right to reinstate after acceleration and the right to bring a court action to assert the non- existence of a default or any other defense of [the mortgagor] to acceleration and sale.” Id. at 227-228. The language in the notice actually sent in Pinti stated that the mortgagors “have the right to assert in any lawsuit for foreclosure and sale the nonexistence of a default or any other defense [they] may have to acceleration and foreclosure and sale.” Id. at 237. After thorough analysis, the SJC held that the language contained in paragraph 22 must be strictly complied with in any foreclosure proceeding because otherwise mortgagors could be “misled into thinking that they had no need to initiate a preforeclosure action against the mortgagee but could wait to advance a challenge or defense to a foreclosure as a response to a lawsuit initiated by the mortgagee.” Id. at 237-239. However, the holding in Pinti was explicitly given prospective effect only, to foreclosures occurring after the decision, issued on July 17, 2015. Petitioners’ case does not fall into this category and is thus, not eligible for the prospective relief announced in Pinti. Id. at 243. Because the Notice need not be in strict compliance with the pre-foreclosure notice language of paragraph 22, the foreclosure deed is not void.

IX. Statutory Power of Sale

Petitioners lastly allege that RCS failed to comply with the statutory power of sale set forth in G.L. c. 183, § 21 and G.L. c. 244, § 17B. Because, like many of their previous arguments, these are bare allegations unsupported by any facts, they cannot withstand a motion for summary judgment even drawing reasonable inferences in favor of the Petitioners. Accordingly, the foreclosure proceedings and the post-foreclosure affidavit were valid.

AARE has established that RCS held the Mortgage at the time of the foreclosure, and that the foreclosure was validly made. The Petitioners have failed to present any evidence to support a legally valid challenge to the Assignment or foreclosure. Thus, their equitable title in the Property was foreclosed upon, after which they held no valid title to the Property. See Bevilacqua, 460 Mass. at 775. They therefore have no standing to challenge RCS’s deed conveying the Property to AARE. The Petitioners have no record title to the Property, and AARE has established superior record title.


For the foregoing reasons, the Defendant’s Motion for Summary Judgment is ALLOWED. Judgment shall enter declaring that Petitioners no longer have a legal interest in the Property and that AARE holds clear and superior record title to the Property.



[Note 1] OSB was renamed to Am-Trust. See Amtrust Bank v. TD Banknorth, N.A., 18 LCR 151 , 152 n.2 (2010).

[Note 2] Multiple federal court, unpublished Appeals Court, and Massachusetts trial court decisions have reached the same conclusion. See Butler v. Deutsche Bank Trust Co. Americas, 748 F.3d 28, 32 (1st Cir. 2014); Woods v. Wells Fargo Bank, N.A., 733 F.3d 349, 355 (1st Cir. 2013); In re Danastorg, 499 B.R. 8, 17-19 (Bankr. D. Mass. 2013); Jepson v. HSBC Bank USA, Nat. Ass'n, No. CIV. 12-12179-LTS, 2013 WL 639184, at *4 (D. Mass. Feb. 20, 2013), aff'd, (1st Cir. June 23, 2014); In re Marron, 462 B.R. 364, 374 (Bankr. D. Mass. 2012), aff'd, 499 B.R. 1 (D. Mass. 2013); Rosa v. Mtge. Elec. Registration Sys., Inc., 821 F.Supp.2d 423, 429 (D. Mass. 2011); In re Marron, 455 B.R. 1, 5-6 (Bankr. D. Mass. 2011); Kiah v. Aurora Loan Services, LLC, No. 10-40161-FDS, 2011 WL 841282 at *8 (D. Mass. Mar. 4, 2011); In re Lopez, 446 B.R. 12, 17–19 (Bankr. D. Mass. 2011); In re Huggins, 357 B.R. 180, 184-185 (Bankr. D. Mass. 2006); Barcelos v. Deutsche Bank Nat. Trust Co., No. 13-P-1361, 2014 WL 2974891, at *2 (Mass. App. Ct. July 3, 2014); Jeevanandam v. Santander Bank, N.A., No. MICV201408234, 2014 WL 7641545, at *2-3 (Mass. Super. Nov. 25, 2014); Commonwealth v. Bank of Am., N.A., No. 11-4363-BLS1, 2012 WL 6062747, at *15 (Mass. Super. Dec. 3, 2012); Adamson v. Mtge. Elec. Registration Sys., Inc., No. 11-0693-H, 2011 WL 1136462, at *3 (Mass. Super. Ct. Mar. 23, 2011); Lyons v. Mtge. Elec. Registration Sys., Inc.,, 19 LCR 44 , 45-46 (2011); Pappas v. Deutsche Bank Nat. Trust Co., 24 LCR 221 , 222 (2016); Campbell v. Fed. Nat.l Mortgage Ass'n, 23 LCR 641 , 645-646 2015); Jenne v. Aurora Loan Servs. LLC, 22 LCR 258 , 260 (2014); Hendricks v. Fed. Nat. Mortgage Ass'n, 22 LCR 184 , 185-186 n.1 (2014), aff'd, 89 Mass. App. Ct. 1112 (2016); Mitchell v. U.S. Bank Nat. Ass'n, 22 LCR 120 , 130 (2014); Stephens-Martin v. Bank of New York Mellon Trust Co., 21 LCR 516 , 519-520 (2013); Pehl v. Countrywide Bank, N.A., 21 LCR 58 , 61 (2013); Abate I, 20 LCR at 635, aff'd sub nom. Abate II, 470 Mass. 821 (2015).