Mills v. U.S. Bank, NA Ex Rel. Lehman XS Trust Mortgage Pass-Through Certificates
2014 U.S. App. LEXIS 9713
| 1st Cir. | 2014Background
- Mills refinanced her Mashpee, MA home in 2006, executing a note with MortgageIT and granting a mortgage to MERS as nominee for lender and successors.
- MERS held bare legal title to the mortgage; the note and mortgage could be held by different parties under Massachusetts law.
- The note was securitized and transferred through multiple entities, ultimately deposited into Lehman XS Trust; no assignments of legal title to the mortgage were recorded along intermediaries.
- IndyMac initially serviced the loan and approved a modification; OneWest later failed to honor the modification after succeeding IndyMac.
- MERS assigned the mortgage to OneWest in 2009; OneWest foreclosed in 2011 and U.S. Bank purchased the property at public auction.
- Mills sued in 2012 alleging lack of authority to foreclose and challenging the mortgage/note chain; district court dismissed for failure to state a claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether OneWest had valid title to foreclose under Massachusetts law | Mills contends MERS never validly held the mortgage title, breaking the chain. | Culhane permits MERS to hold bare legal title as nominee and transfer as needed; appraisal of chain not required. | Yes; district court properly dismissed; MERS valid as mortgagee of record and chain valid under Culhane. |
| Whether the assignment under Mass. Gen. Laws ch. 183, § 54B was proper | Assignment to OneWest violated § 54B because signatories lacked proper authority or accurate recording. | Section 54B was satisfied because MERS had the mortgage at the time of assignment and remained mortgagee of record. | Yes; § 54B assignment was proper; Mills's argument rejected as § 54B applied to MERS's possession. |
| Whether Mills stated a viable Massachusetts Chapter 93A claim | OneWest lacked authority to foreclose and committed unfair or deceptive acts in securitization/assignment. | Authority to foreclose and securitization structure were consistent with Culhane; claim fails on the merits. | Yes; claim failed as foreclosures were authorized; amendment would be futile. |
| Waiver/ forfeiture of newly discovered evidence and other arguments | Newly discovered discrepancies in the assignment and note undermine validity. | Arguments were undeveloped and waived; insufficient to defeat dismissal. | Yes; waived and not considered; other speculative claims rejected. |
Key Cases Cited
- Culhane v. Aurora Loan Servs. of Neb., 708 F.3d 282 (1st Cir. 2013) (MERS as bare legal title holder and nominee fits Massachusetts mortgage law)
- Ibanez v. U.S. Bank Nat'l Ass'n, 941 N.E.2d 40 (Mass. 2011) (foreclosure validity hinges on proper title and authority to foreclose)
- Eaton v. Fed. Nat'l Mortg. Ass'n, 969 N.E.2d 1118 (Mass. 2012) (notes and mortgages may be held separately with implied trust implications)
- Woods v. Wells Fargo Bank, N.A., 733 F.3d 349 (1st Cir. 2013) (distinguishes electronic note transfers from mortgage assignments)
- Marron v. Bank of New York Mellon, 455 B.R. 1 (Bankr. D. Mass. 2011) (continues interpretation that MERS holds mortgage as trustee/nominee while note transfers occur)