MISC 10-428719

December 22, 2010


Long, J.



This is a case brought pursuant to the Servicemember's Civil Relief Act to determine, and by statute limited so it only can determine (1) if the defendant is currently in active military service, and (2) if so, if the obligation at issue was incurred before that service began. [Note 1] 50 U.S.C. App. § 501 et seq. ("the Servicemember's Act"); St. 1990, c. 496, § 1 ("Such proceedings shall be limited to the issues of the existence of such persons and their rights [under the Servicemember's Act] if any"); Beaton v. Land Court, 367 Mass. 385 , 388, 390-91 (1975). Defendant Craig Kay, who does not claim to be entitled to the benefits of the Servicemember's Act, has nonetheless moved to dismiss plaintiff's complaint on the grounds that the plaintiff lacks standing to bring it. [Note 2] Mr. Kay is correct that standing is required. Standing is a matter of subject matter jurisdiction. If the plaintiff does not have standing, the court has no jurisdiction to hear the dispute. Sullivan v. Chief Justice for Admin. & Mgmt. of the Trial Court, 448 Mass. 15 , 21 (2006). But Mr. Kay is incorrect when he asserts that plaintiff BAC Home Loans Servicing LP ("BAC") does not have such standing. His motion to dismiss is therefore DENIED and judgment that he is not entitled to the benefits of the Servicemember's Act shall promptly enter.


Mr. Kay's motion asserts a number of issues with respect to the underlying promissory note. I need not reach those issues because BAC has established that it is the current holder of the mortgage and this is sufficient to grant it standing in a Servicemember's proceeding.

BAC was assigned the mortgage by its prior holder, Mortgage Electronic Registration Systems, Inc. ("MERS"). MERS was the original mortgagee, acting in a fiduciary capacity for the then-lender American Home Mortgage Acceptance, Inc. Mortgage, Kay to MERS at 1 (Nov. 9, 2005) ("MERS is the mortgagee under this Security Instrument"). [Note 3] As the record holder of the mortgage, and as explicitly recognized and granted in the mortgage itself, MERS had the power to assign that mortgage. Id. at 3 ("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 Lender's 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"); GMAC Mortgage LLC v. Reynolds, Land Court Case No. 09 MISC. 400318, Memorandum & Order on Defendants' Motion to Dismiss at 3-4 (Nov. 30, 2010); JP Morgan Acquisition Corp. v. Lord, Land Court Misc. Case No. 427846, Memorandum & Order Denying Defendants' Motion to Vacate Judgment and Dismiss Plaintiff's Complaint (Nov. 29, 2010).

Mr. Kay asserts that the assignment cannot have been valid because American Home Mortgage allegedly was not in existence when it was made. But this does not make the assignment invalid. First, as noted above, as mortgagee with the powers granted in the mortgage (including the power, among others, "to exercise any or all of [the Lender's] interests"), MERS had the authority to assign the mortgage without need to demonstrate the direction of its principal, and its assignee had the right to rely on that authority. Any objection to MERS' exercise of those powers must be timely, and can only come from the principal itself. Mr. Kay has not shown that any such objection was made, and it bears noting that any assignee would have the same legal responsibilities towards the principal as the assignor, i.e. to hold "the legal title in trust for the purchaser of the debt." Barnes v. Boardman, 149 Mass. 106 , 114 (1889). Second, again as noted in the mortgage, MERS acted "as a nominee for the Lender [American Home Mortgage] and Lender's successors and assigns." Mortgage at 1. Mr. Kay's loan obligations have not disappeared; he neither alleges nor has offered any proof that they have.k;,, been released, discharged or forgiven. A "Lender" thus continues to exist and, with Mr. Kay's loan admittedly in default, BAC (as the current holder of the mortgage, holding title "in trust" for that Lender) has both the right and sufficient standing to seek this court's determination of Mr. Kay's status under the Servicemember's Act as part of its fiduciary responsibilities to that Lender, whomever it might ultimately be determined to be. Whether BAC can proceed with foreclosure proceedings is a question for another action and another day.

Mr. Kay has also sought sanctions against BAC in connection with the Mortgagee's Affidavit it filed at the commencement of this case. Mortgagee's Affidavit (Feb. 16, 2010). In that affidavit, BAC claimed to be "the mortgagee of the mortgage." Id. at 1. As later documents showed, however, that statement was incorrect as of the date of the affidavit (February 16, 2010). In fact, BAC did not become the mortgagee (by assignment) until eight days later, February 24, 2010. [Note 4] Corporate Assignment of Mortgage, MERS to BAC Home Loans Servicing LP (Feb. 24, 2010). This is not good but, in the circumstances, I do not find it to be a fraud on this court for which sanctions should be imposed. This is because the statement that BAC was the mortgagee was true at the time the affidavit was submitted to the court (April 30, 2010), because BAC was the mortgagee when the action was commenced (April 30, 2010), and because the eight day difference between February 16 and February 24 has no material effect on the merits of this case. This is not to say that it goes unnoticed or is ultimately of no importance. It may be of importance in other proceedings involving other claims. I leave it to those courts, however, to assess its significance and effect in connection with those proceedings.


By the court (Long, J.)


[Note 1] If the answer to both questions is "yes," the defendant is entitled to the benefits of the Servicemember's Civil Relief Act. If the answer to either is "no," the benefits of that act do not apply. Those benefits are "special rules regarding debts secured by a mortgage, trust deed, or similar security interest in real or personal property owned by a servicemember. Generally, the act prohibits the sale, foreclosure, or seizure of property, based on a breach of such a secured obligation, during the period of military service or within 90 days thereafter. The prohibition applies only to obligations that originated prior to-the servicemember's military service, and for which the servicemember is still obligated." Office of the Comptroller of the Currency, Administrator of National Banks, Advisory Letter No. AL 2004-8 Re: Servicemembers Civil Relief Act at 2 (2004).

[Note 2] Mr. Kay's Affirmative Defenses (Answer and Affirmative Defenses, Sept. 13, 2010) purport to raise additional issues. They are stricken because they are either insufficiently explained or unsupported and, more fundamentally, because (with the exception of the allegation that service of process was insufficient) they are outside the permissible scope of a Servicemember's proceeding. Beaton, 367 Mass. at 388, 390-91. The defense of insufficiency of service of process is stricken because it has not been argued or factually supported in Mr. Kay's submissions and because the record shows that proper service has been achieved.

[Note 3] As the law recognizes and permits, "the holder of the mortgage and the holder of the note may be different persons." Lamson & Co. v. Abrams, 305 Mass. 238 , 245 (1940).

[Note 4] The assignment purports to "be effective as of June 1, 2008" but has no such retroactive effect for G.L. c. 244, § 14 (and perhaps other) purposes. See US Bank, NA v. Ibanez, 17 LCR 202 , 206-207 (2009). This, of course, is not a G.L. c. 244, § 14 proceeding, nor a "mortgage foreclosure proceeding[] in any ordinary sense." Beaton, 367 Mass. at 390.