Serra v. Quantum Servicing, Corp.
747 F.3d 37
1st Cir.2014Background
- In 2007 Serra refinanced his home with EquiFirst; the mortgage named MERS as nominee/mortgagee of record.
- MERS assigned the mortgage to Barclays (2009), which assigned to Quantum; Quantum later assigned to Wells Fargo (2011); Quantum remained servicer.
- Serra sent a rescission letter (Oct. 2010) to the servicer claiming a $244.48 credit-report fee overstated market rate ($50) and understated finance charges under MCCCDA, seeking rescission. No substantive response was received and the property was later foreclosed and sold.
- Serra sued for wrongful foreclosure, Chapter 93A unfair/deceptive practices, assignee liability for predatory lending, and rescission; EquiFirst was dismissed for failure to serve. Wells Fargo counterclaimed for breach and possession.
- District court granted summary judgment to Wells Fargo and Quantum; Serra appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of MERS's ability to hold/assign mortgage | MERS's nominee/bare legal interest is invalid under Massachusetts law, so assignments were void and foreclosure wrongful | First Circuit precedent recognizes MERS may validly hold and assign the bare legal interest in a mortgage | Against Serra — Culhane controls; MERS assignments valid; wrongful foreclosure and Ch. 93A claims fail |
| Assignee liability for predatory/structurally unfair loan terms | Quantum and Wells Fargo, as assignees, are liable for EquiFirst's unfair lending practices under Ch. 93A and Borrower's Interest Act | Absent a statute expressly creating assignee liability (e.g., PHLPA), an assignee who did not participate in origination is not liable for assignor's misconduct | Against Serra — Drakopoulos does not create broad assignee liability here because PHLPA (which does) was not invoked; assignees not liable |
| Right to rescind post-foreclosure sale based on alleged MCCCDA violation | Serra sought rescission for understatement of finance charge due to excessive credit-report fee and argues his pre-sale rescission request should preserve rescission rights | Foreclosure sale cuts off rescission rights; Serra produced no admissible evidence that $50 was the proper market rate, so no genuine dispute of material fact | Against Serra — no valid basis shown for rescission and summary judgment affirmed |
| Wells Fargo counterclaims for breach and possession | Serra contends the district court misapplied law so summary judgment on counterclaims was improper | Wells Fargo maintains proper proof supported breach and possession; Serra's appellate arguments on possession raise new theories not presented below (waived) | Against Serra — briefing inadequate on breach; possession arguments waived; summary judgment affirmed |
Key Cases Cited
- Culhane v. Aurora Loan Servs. of Neb., 708 F.3d 282 (1st Cir. 2013) (holds MERS may validly possess and assign a bare legal interest in a mortgage under Massachusetts law)
- Woods v. Wells Fargo Bank, N.A., 733 F.3d 349 (1st Cir. 2013) (applies Culhane to confirm MERS's ability to assign mortgages)
- Drakopoulos v. U.S. Bank Nat'l Ass'n, 465 Mass. 775, 991 N.E.2d 1086 (Mass. 2013) (interprets PHLPA to create statutorily broad assignee liability for certain high-cost loans and explains limits of assignee liability under Ch. 93A and Borrower's Interest Act)