Beal Bank USA v. New Century Mortgage Corporation
217 A.3d 731
Me.2019Background:
- In 2006 homeowners executed a promissory note naming New Century as lender and a mortgage naming New Century as lender with MERS as nominee.
- The promissory note later transferred through multiple parties and was ultimately held by LNV (later substituted by Beal Bank as plaintiff).
- MERS purportedly assigned the mortgage to LNV in 2008; Beal filed a suit seeking to compel New Century to assign any interest in the mortgage to Beal as holder of the note, asserting an equitable trust.
- New Century did not appear at the January 2018 hearing; Beal submitted the original note and other loan documents, but many documents were not admitted into evidence.
- The Superior Court denied relief, concluding Greenleaf precluded the equitable relief Beal sought; Beal appealed and the Supreme Judicial Court affirmed.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a holder of a promissory note can compel assignment of the accompanying mortgage via the equitable trust doctrine | Beal: holder of the note has an equitable pre-foreclosure right; New Century holds the mortgage in trust for the note holder, so court should compel assignment | New Century/State law: Greenleaf requires separate proof of mortgage ownership; possession of the note alone does not transfer mortgage ownership; MERS as nominee lacked power to convey ownership | Court: affirmed denial — equitable interest from holding the note does not equal ownership nor authorize compelling assignment; Greenleaf controls |
| Whether Beal presented sufficient independent evidence of mortgage ownership to compel assignment | Beal: produced original note, mortgage copy, modifications, and loan correspondence to show entitlement | Opposing view: many documents were not admitted; New Century’s bankruptcy and lack of proof it remained mortgagee preclude compelling assignment | Court: Beal failed to establish actual ownership or entitlement to assignment; court did not compel assignment |
Key Cases Cited:
- Bank of America, N.A. v. Greenleaf, 96 A.3d 700 (Me. 2014) (establishes bifurcated standing—must show holder status of note and ownership of mortgage; possession of note alone insufficient)
- U.S. Bank, N.A. v. Ibanez, 941 N.E.2d 40 (Mass. 2011) (under Massachusetts law holder may seek equitable assignment of mortgage held in trust, decision grounded in Mass. power-of-sale foreclosure context)
- Mortg. Elec. Registration Sys., Inc. v. Saunders, 2 A.3d 289 (Me. 2010) (discusses Maine foreclosure framework and limits on nonjudicial foreclosure)
- Jordon v. Cheney, 74 Me. 359 (Me. 1883) (articulates traditional equitable trust doctrine that mortgagee holds title in trust for note holder)