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EDITOR’S NOTE: A STEP FORWARD AND A STEP BACKWARD. THE JUDGE ALLOWED THE FORECLOSURE TO PROCEED DESPITE NUMEROUS SHORTCOMINGS IN THE PROCESS. Bu the Court’s analysis and conclusions on the issues leading up to its ruling are educational, to say the least and contain valuable pieces of information that can be used in other jurisdictions.
“It is clear … that Culhane is substantially behind in paying her mortgage [EDITOR”S NOTE: The assumption that there is a mortgage to pay and that the balance is what is claimed is not challenged by the homeowner] and appears unable to remediate her default. This, however does not render her an outlaw, subject to having her home seized by whatever bank or loan servicer may first claim to it.”
“Without a claim to the underlying debt, MERS …cannot exercise the power of sale regardless of the language in the mortgage contract giving it this power. That the mortgagor consented to this contractual language does not operate as a waiver of the law’s protection against foreclosure by the wrong entity.”
“an effort to foreclose by an entity lacking ‘jurisdiction and authority’ to carry out a foreclosure — i.e., not holding the mortgage at the time of notice and sale — is void.”
“MERS does not input any of the information in its registry and makes no representations or warranties regarding its accuracy or reliability.”
“MERS’s position that it can be both mortgagee and an agent of the mortgagee is absurd, at best…. MERS readily concedes that it doels not own mortgage loans and “has no rights whatsoever to any payments made on account of such mortgage loans, to any servicing rights related to such mortgage loans, or to any mortgaged properties securing such mortgage terms” [Editor’s note: This will come as a surprise to those Judges who allowed mortgages to be foreclosed in the name of MERS and to those holding ‘Naked title” to such property which still is vested in the homeowner who was foreclosed.]
SEE CULHANE MA CASE DECISION AGAINST MERS
Culhane v Aurora Loan Services of Nebraska
ARTICLE FROM LEGALBISCUIT.WORDPRESS.COM
Massachusetts District Court Judge Young issued an order ruling in favor of Aurora Loan Services when Aurora filed for Summary Judgment.
A copy of the 59 page order can be found at this link. The decision is full of commentary about Mortgage Electronic Registration System (MERS).
If you do not want to read the 59 page order, then Bloomberg Business Week wrote a quick synopsis of the decision. I have included an excerpt from Bloomberg Business Week article below. The full write up can be found on this page.
MERS Foreclosures Held Valid under Massachusetts Law
“The Mortgage Electronic Registration System, known as MERS, complies with Massachusetts law and allows mortgages to be foreclosed assuming several simple conditions are met, U.S. District Judge William G. Young in Boston ruled on Nov. 28 by handing down a 59-page opinion. Young characterized MERS as the “Wikipedia of land registration systems.”
Near the end of the opinion, Young wrote a six-page, single-spaced footnote saying that the result may have been different were the case in state court where the judges have greater ability to modify state judge-made law in response to novel factual issues.
Before foreclosure was initiated, the mortgage note was assigned to a bank serving as trustee holding securitized mortgages. The mortgage had been assigned by MERS to the servicer for the bank, as trustee.
Young interpreted Massachusetts law as requiring the party foreclosing to be the holder of the mortgage and also to own the mortgage note or be the servicer for the noteholder.
In the case before him, the servicer was wearing both hats and thus was entitled to foreclose, Young ruled. Young declined to follow several Massachusetts cases holding that the holder of the mortgage and note need not be the same.
Young described in detail how individuals not associated with MERS can be deputized as officers of MERS authorized to assign mortgages and mortgage notes. Young said he was “deeply troubled that, with little or no oversight, individuals without any tie to or knowledge of the company on whose behalf they are acting may assign mortgages – that is, they may transfer legal title to someone else’s home.”
Young’s decision may not hold in states with different real estate laws.
In a case earlier this year called Veal v. American Home Mortgage Servicing Inc., the Bankruptcy Appellate Panel for the 9th Circuit denied foreclosure when the holder of the mortgage couldn’t prove it was also the owner of the mortgage note. To read about the Veal case, click here for the June 14 Bloomberg bankruptcy report.
The Massachusetts case is Culhane v. Aurora Loan Services of Nebraska, 11-11098, U.S. District Court, District of Massachusetts (Boston).”
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