In Re Bailey
468 B.R. 464
Bankr. D. Mass.2012Background
- Debtor obtained a $104,000 loan in 1992 from Shawmut Mortgage secured by a mortgage on her Hudson, MA condo.
- In 2008 the Debtor defaulted; Wells Fargo, as holder of the Mortgage, commenced foreclosure proceedings in MA by filing a SCRA petition in Land Court on Aug. 26, 2009.
- On Sept. 22, 2009 Harmon mailed both a Notice of Foreclosure Sale and a Notice of Intention to Foreclose by certified mail (unclaimed) and first-class mail.
- Foreclosure sale occurred Oct. 23, 2009; the Debtor filed a Chapter 13 petition on Nov. 23, 2009, before recording the foreclosure deed.
- Debtor sues in adversary proceeding seeking a declaratory judgment that the Foreclosure Sale is void due to improper notice and/or Wells Fargo’s lack of record title at the time of sale.
- Court previously resolved other claims; the remaining issue is validity of the Foreclosure Sale under MA law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether notice of the foreclosure sale complied with MGL ch. 244, § 14. | Bailey contends she did not receive certified notices. | Wells Fargo asserts proper mailing suffices; actual receipt is not required. | Notice mailed, nonreceipt immaterial; sale valid on notice grounds. |
| Whether Wells Fargo held the Mortgage at the time of the foreclosure sale. | WaMu entities may not have transferred title; Wells Fargo lacked authority to foreclose. | Wells Fargo argues Land Court order and corporate-transaction chain show possession. | Material factual dispute remains; summary judgment denied on holding. |
| Effect of the Land Court order on ownership and enforceability. | Order did not bind this case or Debtor; not controlling here. | Order assigns WaMu HLI assets to WaMu FA, potentially affecting ownership. | Land Court Order not binding here; cannot determine ownership solely from that order. |
| Whether Debtor has standing to challenge the foreclosure. | As Chapter 13 debtor, she can challenge invalid foreclosure and protect estate. | Standing limited to challenges to actual assignment defects; injury disputed. | Debtor has standing to challenge foreclosure validity; summary judgment denied. |
| Whether the foreclosure sale was conducted in accordance with nonbankruptcy law given ownership questions. | If the Mortgage wasn’t validly transferred, sale could be void. | Sale complied with nonbankruptcy law if holder at time of notice. | Residual factual questions about asset transfer prevent ruling; further evidentiary hearing required. |
Key Cases Cited
- U.S. Bank Nat'l Ass'n v. Ibanez, 458 Mass. 637 (Mass. 2011) (mandatory notice to mortgagor; holder must be correct on notice or sale may be void)
- Culhane v. Aurora Loan Servs. of Neb., 826 F. Supp. 2d 352 (D. Mass. 2011) (strict adherence to power of sale terms; failure nullifies sale)
- Bevilacqua v. Rodriguez, 460 Mass. 762 (Mass. 2011) (mortgagor retains equity of redemption; foreclose date affects rights)
- In re Correia, 452 B.R. 319 (1st Cir. BAP 2011) (standing/issues related to assignments; relevance to mortgage challenges)
- In re Lopez, 446 B.R. 12 (Bankr. D. Mass. 2011) (HAMP standing discussion; distinguishable from mortgage holder standing)