Lopez v. Mortgage Electronic Registration Systems, Inc. (In re Lopez)
486 B.R. 221
Bankr. D. Mass.2013Background
- Debtors refinanced their mortgage with Decision One; Note and Mortgage were assigned to MERS; Assignment to Consumer executed Jan 9, 2009 and recorded Feb 2, 2009.
- Foreclosure sale occurred March 11, 2009 and the foreclosure deed was recorded Oct 1, 2009.
- Debtors filed Chapter 13 in Dec 2009; Consumer REO moved for relief from stay in Apr 2010.
- Debtors commenced adversary proceeding seeking declaratory judgments and damages on nine counts.
- Court consolidated the Motion for Relief with the adversary proceeding; Defendants moved for summary judgment on all counts.
- Massachusetts Servicemembers Act issues and post-2008/2012 state-law developments are relevant to the assignment, foreclosure legitimacy, and potential remedies.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Foreclosure Sale was valid given the Assignment to Consumer | Lopez asserts the Assignment was invalid (improper address; signatory authority) and thus Consumer lacked standing. | Defendants contend the assignment was binding despite address issues and that signatory authority was adequate; even if imperfect, valid under MA law. | Count I remains; summary judgment denied; Foreclosure validity unresolved on record. |
| Whether Debtors have standing to challenge the Assignment and Foreclosure | Debtors have concrete injury from foreclosure by an assignee lacking authority. | Defendants argue Debtors lack standing to challenge assignment as a third party. | Debtors have standing to challenge the assignment; merits question to be determined. |
| Whether the implied covenant of good faith governs breach of contract claims | Defendants failed to provide truthful notices as required by Note/Mortgage. | No express duty to negotiate in good faith; no contractual obligation to negotiate before sale. | Count III granted to Defendants (no breach in implied covenant established). |
| Whether TILA/MCCCDA notices and rescission rights were violated | Debtors claim multiple Notices of Right to Cancel were required for extended rescission. | Lack of multiple copies does not extend rescission; one notice suffices under controlling law. | Count IV granted to Defendants (no extended rescission; limits apply). |
| Whether the loan qualifies as a high-cost mortgage under the Predatory Lending Act | Loan was “high-cost” and predatory; lender deception alleged. | Loan did not meet Act’s high-cost criteria; calculations show not a high-cost loan. | Count IX (Predatory Lending) granted to Defendants; loan not high-cost under the statute. |
Key Cases Cited
- U.S. Bank Nat. Ass'n v. Ibanez, 458 Mass. 637 (Mass. 2011) (foreclosure by mortgage holder with power of sale requires proper assignment and standing)
- In re Bailey, 468 B.R. 464 (Bankr.D.Mass.2012) (standing to challenge foreclosure based on assignment)
- In re Laudani, 401 B.R. 9 (Bankr.D.Mass.2009) (implied covenant of good faith in contract; scope limited to contract)
- McKenna v. Wells Fargo Bank, N.A., 693 F.3d 207 (1st Cir. 2012) (TILA/MCCCDA rescission framework; single notice suffices)
- Eaton v. Federal National Mortgage Association, 462 Mass. 569 (Mass. S.J.C. 2012) (foreclosure entity must hold note and mortgage; prospective application)
- Commonwealth v. Fremont Investment & Loan, 452 Mass. 733 (Mass. 2008) (debt-to-income presumptions under predatory lending law)