Carlson v. Wells Fargo Bank, National Association, as trustee
11-04005
Bankr. D. Mass.Aug 2, 2011Background
- Debtors Christopher and Christine Carlson filed Chapter 13 and adversary against Wells Fargo (and MERS/PNC) over loans on their Ashburnham, MA home.
- Two mortgage loans: First Mortgage $240,000 to First Franklin; Second Mortgage $60,000 to First Franklin; both secured by MERS as nominee.
- Assignments: First Mortgage assigned to Wells Fargo; Second Mortgage assigned to First Franklin Financial Corp.; endorsements later blank on notes.
- Modification: February 2010 Home Affordable Modification increased principal; provided no release of underlying loan obligations.
- Court consolidated Wells Fargo’s relief-from-stay motion with the adversary; plaintiffs claim rescission under Massachusetts MCCCDA (Counts I–II), rescission of modification (Count III), and invalidity of assignments (Count IV) and unsecured status for Second Mortgage (Count V).
- Court addresses standing to seek relief from stay and whether counts I–IV survive under Rule 12(b)(6).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether debtors may rescind under MCCCDA despite time/threshold limits | Carlson argues extended rescission rights under MCCCDA §10(f). | Wells Fargo argues Bettano strict four-year limit and $35 threshold apply. | Counts I–II dismissed; no rescission relief. |
| Whether modification constitutes a refinancing requiring new disclosures | Carlson contends modification is a refinance under MCCCDA §32.20. | Wells Fargo argues modification not a refinancing; no new disclosures required. | Count III dismissed; modification not a refinancing. |
| Whether the First Mortgage Assignment is valid and Wells Fargo has standing to foreclose | Carlson argues defects render Wells Fargo unsecured; assignment invalid. | Wells Fargo asserts valid assignment; MERS authority; Wells Fargo forecloses as mortgagee. | Assignment valid; Wells Fargo has standing to seek relief from stay; Count IV dismissed. |
| Whether Wells Fargo may enforce the First Mortgage Note and foreclose when possession of the Note is uncertain | Carlson asserts lack of possession; argues note not enforceable. | Wells Fargo argues foreclosure as mortgagee independent of note possession; fiduciary for note holder. | Enforcement of the Note immaterial for stay relief; foreclosure proper as mortgagee; Count IV still dismissed. |
Key Cases Cited
- In re Bettano, 440 B.R. 13 (Bankr. D. Mass. 2010) (MCCCDA rescission window and $35 threshold; recoupment limits.)
- Hart v. GMAC Mortgage Corp. (In re Hart), 246 B.R. 709 (Bankr. D. Mass. 2000) (MCCCDA interpreted via TILA framework.)
- Grella v. Salem Five Cent Sav. Bank, 42 F.3d 26 (1st Cir. 1994) (colorable claim to property of the estate; standing to seek relief from stay.)
- In re Lopez, 446 B.R. 12 (Bankr. D. Mass. 2011) (standing for a creditor to seek relief from stay based on mortgage interests.)
- Maisel, 378 B.R. 19 (Bankr. D. Mass. 2007) (standing requirement for filing stay-relief motions.)