Rosa v. MORTGAGE ELECTRONIC SYSTEMS, INC.
821 F. Supp. 2d 423
| D. Mass. | 2011Background
- Plaintiffs Rosa and Oliveira filed a Land Court action challenging a mortgage/Note sequence and foreclosures; MERS and Merscorp removed to federal court under 28 U.S.C. §§ 1441-1446.
- The Note secured by a mortgage on Plaintiffs’ Marlborough, MA property identifies Pinnacle Direct Funding as lender, with MERS named as nominee and mortgagee.
- Pinnacle allegedly dissolved in 2008; in 2009 MERS purportedly assigned the mortgage to HSBC AB1, recorded of record, with a foreclosure filing by Harmon Law Offices.
- Foreclosure sale occurred in December 2009, with HSBC AB1 transferring to HSBC Deutsche, and MLS/publication of sale materials followed.
- Plaintiffs allege MERS lacked authority to assign the mortgage, and that the chain of title and standing to foreclose are defective.
- Massachusetts law allows mortgage assignments to be valid even if the note is not held by the assignor, and MERS’ authority as mortgagee/nominee can survive dissolution of Pinnacle.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether MERS had authority to assign the Mortgage to HSBC AB1 | Rosa argues MERS lacked authority as nominee | MERS authorized to assign as mortgagee/nominee for Pinnacle and successors | Assignment valid; MERS authorized to assign |
| Whether Pinnacle’s dissolution affects MERS’s assignment authority | Dissolution terminates Pinnacle’s authority | Dissolution does not negate MERS’s authority or successors’ rights | Dissolution did not affect MERS’s authority; assignment valid |
| Whether MERS needed possession of the Note to assign the Mortgage | Note possession required for valid assignment | Massachusetts law permits mortgage assignment without note possession; MERS as mortgagee can assign | Not required to possess the Note; Counts II and V dismissed for lack of standing/validity |
| Whether HSBC AB1 had authority to foreclose on Plaintiffs’ property | Foreclosure invalid if lack of proper holder/authority | HSBC AB1 valid mortgagee via assignment and proper chain prior to sale | HSBC AB1 valid mortgagee with power to foreclose; Counts III-IV dismissed |
| Whether Plaintiffs state a claim for slander of title | Foreclosure publications were false/malicious | Assignments were valid; publications not false or malicious | Slander of title claims fail; Counts VI-VIII dismissed |
Key Cases Cited
- In re Marron, 455 B.R. 1 (Bkrptcy.D.Mass.2011) (Mass. mortgagee/nominee authority; no written chain of title required for MERS)
- Ibanez, 458 Mass. 637 (Mass. Supreme Judicial Court, 2010) (nonjudicial foreclosure; unity of mortgage and note not required; mortgagee may foreclose)
- Aliberti v. GMAC Mortgage, LLC, 779 F. Supp. 2d 242 (D. Mass. 2011) (authority of mortgagee/nominee to assign; statutory requirements)
- In re Lopez, 446 B.R. 12 (Bkrptcy.D.Mass.2011) (MERS authority to foreclose as mortgagee/nominee)
- Valerio v. U.S. Bank, N.A., 716 F. Supp. 2d 124 (D. Mass. 2010) (foreclosure valid where mortgagee holds mortgage; note possession not required)