Judge Long: Principal Must be Disclosed

Who is the lender? This is an abstract from the Judge Long decision. Things in red were done by Max Gardner, in bold by Neil. see entire abstract Judge Long Ibanez Massachuseetts Decision Abstract

Editor’s Note: The “principal” is the “lender” is the creditor” is the “real party in interest” is the “only party that advanced cash” to fund the securitization chain, including your loan.

“when a foreclosure is noticed and conducted for one party by another, the name of the principal must be disclosed in the notice”

“A mortgage is a contract.  It is fundamental and basic that a party seeking to exercise a contractual right (here, the power of sale) has the contractual right to do so at the time of its exercise.” 

“I am puzzled at this since, as noted above and discussed more fully below, the plaintiffs’ own securitization documents required mortgage assignments to be made to the plaintiffs in recordable form for each and every loan at the time the plaintiffs acquired them.  Surely, compliance with this requirement would (and certainly should) have been a priority for an entity issuing securities dependent on recoveries from loans, such as these, known from the start to have a higher than normal risk of delinquency and default.”

“since the blank mortgage assignments failed to name an assignee, they were ineffective to transfer any interest in the mortgage”

“actually holding something and having only the right to be its holder are two very different things.  To obtain a mortgage assignment you do not actually possess presumes, at the least, that you have a demonstrable right to get it, that you will be able to determine the entity that validly holds the mortgage you need assigned (not always easy when all previous assignments have not been recorded at the Registry),[1] that that entity will still be operational,[2] that it will be able to find the relevant paperwork, that it will have someone with authority to execute the relevant paperwork, and that it will be able to do so in a timely fashion.  These presumptions are not always accurate.  See n. 21, supra.  As noted above, even the plaintiffs, armed with all their contractual rights, knowledge, and (presumably) access to the relevant files and authorized persons, took ten months in Ibanez, and fourteen months in Larace, to get actual mortgage assignments in recordable form.”

 

“The issues in this case are not merely problems with paperwork or a matter of dotting i’s and crossing t’s.  Instead, they lie at the heart of the protections given to homeowners and borrowers by the Massachusetts legislature.  To accept the plaintiffs’ arguments is to allow them to take someone’s home without any demonstrable right to do so, based upon the assumption that they ultimately will be able to show that they have that right and the further assumption that potential bidders will be undeterred by the lack of a demonstrable legal foundation for the sale and will nonetheless bid full value in the expectation that that foundation will ultimately be produced, even if it takes a year or more.  The law recognizes the troubling nature of these assumptions, the harm caused if those assumptions prove erroneous, and commands otherwise.”

“The plaintiffs’ fallback argument — that their foreclosures were valid because they were done at the direction of the actual mortgage holder (Option One) — also fails, for two reasons.

            “First, the direction did not come from Option One, but rather from another entity (Fidelity) acting for Option One in its capacity as Loan Servicer.  There is nothing in the record that shows Fidelity’s capacity to act for Option One generally (and, more specifically, as Originator and holder of the mortgage) and certainly nothing that shows it had any authority to order the disposition of Option One’s assets.  This is no mere technicality.  It should never be forgotten that the subjects of these purported directions were interests in land, with all the proofs and safeguards that that necessarily entails.  See, e.g., G.L. c. 259, § 1 (statute of frauds). 

“the plaintiffs were not the present holders of the mortgage at the time of the notice and sale.  They were not properly authorized by the mortgage holder at those times.  Even if their counsel were acting at the direction of an agent for a party that, in another capacity, coincidentally was the mortgage holder, the notice and conduct of the foreclosure sale in the plaintiffs’ names under the incorrect representation that the plaintiffs were the mortgage holders makes the sales invalid.   And, for the reasons previously held, retroactive assignments, long after notice and sale have taken place, do not cure the statutory defects.”

---

[1]               An assignment simply from the last assignee of record may not be sufficient.  That assignee may have previously assigned the mortgage in an off-record transaction and that off-record assignment may be recorded (even if erroneously) while you are waiting for yours to be processed — a process that the plaintiffs’ counsel conceded currently takes anywhere from “two to three months” to “as long as ten to twelve as is observed in some of these cases.  And quite frankly, who knows why.”  Statement of Walter Porr, Jr. at oral argument (Apr. 17, 2009).  If so, you would need to pursue an assignment from that entity, with associated additional potential problems and delay.

[2]               As noted above, Lehman Brothers and its subsidiaries are currently in bankruptcy and Option One has ceased operations. 

Tags: bankruptcy, borrower, disclosure, Eviction, foreclosure defense, fraud, Lender Liability, predatory lending, securitization, trustee, Wells Fargo
Posted in Eviction |