KATHLEEN MCMATH v. JAMES SHEA

In September 2006, plaintiff Kathleen M. McMath granted a mortgage to defendant James W. Shea (the "Mortgage"). The Mortgage secured McMath's obligation to pay a $40,000.00 promissory note (the "Note"). The Mortgage covered McMath's residence, Unit 68B in a condominium at 68 School Street, Salem, Massachusetts.

The Mortgage does not state, on its face, its maturity date or the maturity date of the Note. Instead, it reads in pertinent part: "I, Kathleen M. McMath, for consideration paid, grant to James W. Shea with MORTGAGE COVENANTS to secure the payment of Forty Thousand Dollars ($40,000.00) payable as provided in a note of even date." While the Mortgage was contemporaneously recorded at the Southern Essex District Registry of Deeds (the "Registry"), the Note wasn't.

In September 2007, Ms. McMath and Mr. Shea executed an Agreement for Revision of Terms of Note (the "Revision Agreement"). The Revision Agreement describes McMath and Shea as "Mortgagor" and "Mortgagee," respectively. The Revision Agreement states that "the MORTGAGOR has executed and delivered to MORTGAGEE a real estate mortgage Note . . . secured by a mortgage of certain real estate known as and numbered 68 School Street, Unit B, . . . which mortgage is recorded with the Essex Registry of Deeds Southern District in Book 26101, Page 196. . . ." (Capitalization in original.) The Revision Agreement then states that "the parties hereto desire to effect changes in the terms of said NOTE. . . ." They then "agree[d] that the NOTE is hereby further amended as follows: . . . The Maturity Date, referred to in paragraph 3 of said NOTE is hereby changed to September 15, 2008." (Capitalization in original.)

As was the case with the parties' original Note, no one contemporaneously recorded at the Registry the Revision Agreement. Thus, from September 2006 to August 16, 2018, the only recorded document at the Registry concerning the Mortgage was the Mortgage itself. And since the Mortgage didn't contain a stated term or maturity date, would it ever expire under Massachusetts law? The answer to that question is yes, according to M.G.L. c. 260, §33, the Obsolete Mortgage Statute. It provides:

A power of sale in any mortgage of real estate shall not be exercised and an entry shall not be made nor possession taken nor proceeding begun for foreclosure of any such mortgage after the expiration of, in the case of a mortgage in which no term of the mortgage is stated, 35 years from the recording of the mortgage or, in the case of a mortgage in which the term or maturity date of the mortgage is stated, 5 years from the expiration of the term or from the maturity date, unless an extension of the mortgage, or an acknowledgment or affidavit that the mortgage is not satisfied, is recorded before the expiration of such period. In case an extension of the mortgage or the acknowledgment or affidavit is so recorded, the period shall continue until 5 years shall have elapsed during which there is not recorded any further extension of the mortgage or acknowledgment or affidavit that the mortgage is not satisfied . . . Upon the expiration of the period provided herein, the mortgage shall be considered discharged for all purposes without the necessity of further action by the owner of the equity of redemption or any other persons having an interest in the mortgaged property. . . .

Hence, between September 2006 and August 16, 2018, from all that appeared on record at the Registry, one would think that the Mortgage was to expire 35 years from its recording.

Ms. McMath claims that the situation changed as of August 17, 2018. On that day, McMath recorded at the Registry a document titled Affidavit Under M.G.L. c. 183, §5B. McMath attached to the Affidavit a copy of the Mortgage and the Revision Agreement. She argues that the Revision Agreement converted the Mortgage, for purposes of the Obsolete Mortgage Statute, from one in which "no term of the mortgage is stated" into one "in which the . . . maturity date is stated . . . ." Relying on Deutsche Bank Nat'l Trust Co. v. Fitchburg Capital, LLC, 471 Mass. 248 (2015), and Overlook Props., LLC v. Braintree Co-Operative Bank, 24 LCR 89 (2016), aff'd, 92 Mass. App. Ct. 1103 (2017) (Rule 1:28 decision), McMath argues that because the Mortgage refers to the Note, and because the Revision Agreement (which extended the Note's maturity date) references the Mortgage, the Revision Agreement also must have thereby set a maturity date for the Mortgage.

Ms. McMath has moved for summary judgment on Count I of her First Amended Complaint in this case. She claims in that Count that she's entitled to a declaration that the Obsolete Mortgage Statute has worked a discharge of the Mortgage. Mr. Shea has moved for summary judgment on a counterclaim that poses the flip side of the same issue. He contends that the Mortgage remains one that states no term or maturity date.

Mr. Shea has the stronger statutory argument. While Deutsche Bank holds that a mortgage becomes one with a "stated" maturity date if it refers to the maturity date of the loan that the mortgage secures, see Deutsche Bank, 471 Mass. at 253-254, both Judge Foster's decision in Deutsche Bank and Judge Long's later decision in Merritt v. Pensco Trust Co., 27 LCR 205 (2019), emphasize the importance of what's on the public record concerning a mortgage in deciding issues arising under the Obsolete Mortgage Statute. See Deutsche Bank Nat'l Trust Co. v. Fitchburg Capital, LLC, 21 LCR 559 , 563 (2013) (describing policy rationale for relying on what's stated in a recorded mortgage, instead of off-record documents such as promissory notes); Merritt, 27 LCR at 206-207 (mortgage that lacks a stated maturity date, and that refers to an unrecorded note without stating the note's maturity date, remains a "no term stated" mortgage for purposes of c. 260, §33 even if the note states its maturity date). While McMath correctly observes that, under Overlook, a loan-modification agreement can convert a "no-term-stated" mortgage into a "term-stated" mortgage, the loan-modification agreement in Overlook (a copy of which McMath included in the summary-judgment record for this case) expressly amended the underlying mortgage, and was recorded within 60 days of execution. McMath's Revision Agreement doesn't state that it amends the Mortgage, nor did it have that effect. And no one recorded it until more than a decade later.

Thus, consistent with Merritt, this Court DENIES Ms. McMath's motion for summary judgment on her claim concerning the Obsolete Mortgage Statute, and GRANTS Mr. Shea's motion for summary judgment on the same issue. The Court will declare that the Revision Agreement did not convert the Mortgage into one that states its term.

Ms. McMath also has moved for summary judgment on Counts II and III of her First Amended Complaint. She seeks in those counts declarations that Mr. Shea can't use the Mortgage to enforce McMath's liability for late fees and first-year interest that exceed M.G.L. c. 183, §59 (governing late fees on notes secured by a mortgage on residential condominium units) and c. 271, §49(a) (governing interest on loans). Shea stipulated at oral argument on the parties' summary-judgment motions that he won't use the Mortgage to collect such fees. The Court will enter a judgment that accords with that stipulation. Shea also seeks an order allowing him to record at the Registry a declaration that the Mortgage states no term, and a further order "expunging" the Affidavit from the Registry. The Court ALLOWS the former request but not the latter. Shea offers no authority for when (if ever) a court may expunge a recorded §5B affidavit, nor has he offered any reason why it would be necessary to do that once a court issues a recordable judgment that contradicts what a §5B affidavit asserts.

Judgment to enter accordingly.