Barrasso v. New Century Mortgage Corp.
AC 15-P-1458
Mass. App. Ct. UFeb 8, 2017Background
- In Sept. 2005 Barrasso purchased a condominium and executed two New Century promissory notes secured by a first mortgage ($211,200) and a second mortgage ($52,800), both recorded.
- New Century filed bankruptcy April 2, 2007. Pooling & Servicing Agreements (2005 PSA and 2007 PSA) identified trusts that purportedly included the loans, but New Century was not a named party to those PSAs and no contemporaneous recorded assignments from New Century appeared.
- Barrasso executed a loan modification effective Dec. 1, 2007, signed by LaSalle as trustee for the C-BASS Trust, modifying the first loan and containing representations that the security instrument (first mortgage) was valid and unchallenged.
- Recorded assignments: April 14, 2009 assignment (Litton, as attorney-in-fact for New Century, to Bank of America as trustee for C-BASS) and June 5, 2013 assignment (Ocwen to U.S. Bank) for the first mortgage; Aug. 10, 2012 assignment (Ocwen to Deutsche Bank) is the only recorded assignment for the second mortgage.
- Barrasso sued in Land Court (quiet title) seeking removal of both mortgages as clouds on title, arguing transfers after New Century’s bankruptcy were ineffective; Land Court granted summary judgment to defendants declaring U.S. Bank held the first mortgage and Deutsche Bank held the second.
- On appeal, this court affirmed dismissal of Barrasso's claims and U.S. Bank's declaratory relief as to the first mortgage, but vacated the declaration in favor of Deutsche Bank because material facts about the second mortgage assignment remained in dispute.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the first mortgage was validly transferred despite New Century's bankruptcy | Barrasso: New Century could not validly transfer after bankruptcy; PSAs don’t show a direct assignment from New Century | Defendants: Off-record transfers and later recorded assignments (and servicing/POAs) confirm trust ownership | Held: Estoppel — Barrasso’s loan modification (signed with LaSalle as trustee) estops him from denying LaSalle/C-BASS held the first mortgage as of Dec. 1, 2007; U.S. Bank’s title affirmed |
| Whether recorded assignments are wholly void (so mortgage must be stricken) | Barrasso: Assignments after bankruptcy are void, so mortgages are clouds to be removed | Defendants: Any defect would be voidable, not void; note-holder can compel assignment; recorded assignments are confirmatory | Held: To remove a mortgage as a cloud plaintiff must show assignment is wholly void; Barrasso failed to do so for either mortgage |
| Whether the 2007 PSA (and related documents) effected a valid transfer without New Century as party | Barrasso: PSAs cannot effect transfer because New Century not a signatory; no recorded pre-bankruptcy assignment | Defendants: PSAs, schedules, powers of attorney, and subsequent confirmations show transfer into trusts | Held: Court need not resolve PSA alone for first mortgage because modification estoppel resolved ownership; factual disputes remain as to second mortgage transfer |
| Whether Deutsche Bank holds the second mortgage (entitling it to declaratory relief) | Barrasso: No proof party to 2005 PSA received assignment from New Century; title disputed | Deutsche Bank: PSA and subsequent assignment by attorney-in-fact establish its interest; note is under its control | Held: Vacated as to Deutsche Bank — material factual issues remain about whether the second mortgage was validly assigned to the Home Equity Trust; but mortgage itself is not stricken because someone may still enforce it |
Key Cases Cited
- Cuddyer v. Stop & Shop Supermkt. Co., 434 Mass. 521 (summary judgment standard)
- Eaton v. Federal Natl. Mort. Assn., 462 Mass. 569 (note-holder entitled to demand assignment; relation of note-holder and mortgage-holder)
- U.S. Bank, Natl. Assn. v. Ibanez, 458 Mass. 637 (requirements for showing valid transfer into a trust)
- Reading Co-op. Bank v. Suffolk Constr. Co., 464 Mass. 543 (elements of equitable estoppel)
- Boazova v. Safety Ins. Co., 462 Mass. 346 (de novo review of summary judgment)