Nickless v. HSBC Bank USA, N.A.
485 B.R. 485
D. Mass.2012Background
- Soroko-Marron and Marron owned the Have-rill residence; MERS held the mortgage as nominee for Fieldstone and the note holder.
- Mortgage included power of sale and stated MERS was the mortgagee under the Security Instrument and acted as nominee for the lender and its successors and assigns.
- Foreclosure proceedings were initiated after Soroko-Marron defaulted in 2007; assignment of the mortgage to HSBC occurred via MERS through a sequence of purported officers and notaries.
- Fieldstone bankruptcy in 2007–2008 involved rejection of contracts including MERS-related assignments, yet this did not eradicate MERS’s authority as nominee.
- In October 2010, the Marrons filed for Chapter 7; HSBC sought relief from the automatic stay to foreclose; Trustee challenged HSBC’s standing to foreclose on grounds that MERS lacked interest to assign.
- The Bankruptcy Court granted relief from stay; trustee appealed and certified two Massachusetts-law questions to the SJC (which were subsequently denied), and foreclosure occurred in September 2011.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of MERS-to-HSBC mortgage assignment | Nickless: MERS lacked authority to assign without note-holder authorization | HSBC: MERS can assign as nominee for note holder | Assignment valid under Massachusetts law |
| Effect of Fieldstone’s bankruptcy on assignment authority | Nickless: Fieldstone bankruptcy invalidates assignment authority | HSBC: bankruptcy does not defeat MERS’s authority as nominee | Bankruptcy did not defeat MERS’s authority to assign to HSBC |
| Statutory compliance of MERS assignment under M.G.L. ch. 183, § 54B | Nickless: 54B deficiencies render assignment invalid | HSBC: 54B satisfied; assignments binding | 54B satisfied; assignment binding on MERS |
| Foreclosure without possession of the underlying note | Nickless: unity of mortgage and note required for foreclosure | HSBC: pre-Eaton mortgagee can foreclose without note | Pre-Eaton mortgagee permitted to foreclose without note; no note-holding proof required |
Key Cases Cited
- In re Hundley, 603 F.3d 95 (1st Cir. 2010) (certification and Massachusetts-law issues; interpretive framework for state-law questions in bankruptcy)
- Fischer v. Bar Harbor Banking and Trust Co., 857 F.2d 4 (1st Cir. 1988) (certification of state-law questions; ascertain state-law meaning)
- Bi-Rite Enters. v. Bruce Miner Co., 757 F.2d 440 (1st Cir. 1985) (course of state-court interpretation; precludes certification where state course clear)
- Eaton v. Fed. Nat. Mortg. Ass’n, 462 Mass. 569 (Mass. 2012) (foreclosure by mortgagee without holding the note; mass. Supreme Judicial Court interpretation)
- Rosa v. Mortgage Elec. Sys., Inc., 821 F. Supp. 2d 423 (D. Mass. 2011) (authority of MERS to assign; reliance on MERS as nominee)