IN RE SCHWARTZ
It is undisputed that Deutsche was not the original mortgagee of the mortgage on Ms. Schwartz’s home, so it must prove that the mortgage was assigned to it prior to the date when the first foreclosure notice was published. As discussed in the memorandum and order on the plaintiff’s motion for a new trial, while the evidence established that an assignment of the mortgage from Mortgage Electronic Registration Systems, Inc. (“MERS”) to Deutsche was executed on May 23, 2006, the day before the foreclosure sale, this assignment, being well after the notice of foreclosure sale was first published, did not confer on Deutsche the power to foreclose on May 24. The Supreme Judicial Court in Ibanez,however, offered an alternative method for a party to acquire sufficient rights in a mortgage to qualify to foreclose:
Where a pool of mortgages is assigned to a securitized trust, the executed agreement that assigns the pool of mortgages, with a schedule of the pooled mortgage loans that clearly and specifically identifies the mortgage at issue as among those assigned, may suffice to establish the trustee as the mortgage holder.
Ibanez, 458 Mass. at 651.
With this in mind, the defendants introduced into evidence at trial all of the agreements tracking the transfer of Ms. Schwartz’s mortgage loan from its originator, First NLC Financial Services, LLC (“First NLC”), to Deutsche, complete with the necessary schedules of the pooled mortgage loans specifically identifying her mortgage as being among those transferred. The defendants argue that these agreements, together with other evidence introduced by them, establish that Deutsche was the holder of the mortgage well in advance of the first publication of the notice of sale.
At trial, Ronaldo Reyes, a Deutsche vice president, testified that he had management responsibility over the administration of the Morgan Stanley Home Equity Loan Trust 2005-4 (the “Trust”) and that Deutsche had always been the trustee of the Trust. He testified that in his capacity as vice president he had access to the books and records of the Trust and was qualified to authenticate and testify about the documents admitted into evidence by the defendants. During the course of his testimony, Mr. Reyes authenticated executed copies of each of the agreements discussed below, and demonstrated that Ms. Schwartz’s mortgage loan was included on the mortgage loan schedules attached as exhibits to several of the agreements. Mr. Reyes testified that each was used in the ordinary course of Deutsche’s business as trustee of the Trust.
The following documents were admitted into evidence: (i) the mortgage on Ms. Schwartz’s home; (ii) the original promissory note executed by Ms. Schwartz, which Mr. Reyes noted was endorsed in blank by First NLC; (iii) the Amended and Restated Mortgage Loan Purchase Agreement (the “Loan Purchase Agreement”) dated as of September 1, 2005 by and between Morgan Stanley Mortgage Capital, Inc. (“MS Mortgage Capital”) and First NLC; (iv) the Assignment and Conveyance Agreement dated September 29, 2005, by and between First NLC and MS Mortgage Capital; (v) the Bill of Sale dated November 29, 2005 by and between MS Mortgage Capital and Morgan Stanley ABS Capital I Inc. (“MS ABS Capital”); and (vi) the Pooling and Servicing Agreement (the “PSA”) dated as of November 1, 2005 by and among MS ABS Capital, HomEq Servicing Corporation, JPMorgan Chase Bank, National Association, First NLC, LaSalle Bank National Association and Deutsche. Mr. Reyes also testified regarding a custodial log that was admitted into evidence for the purpose of proving that Ms. Schwartz’s loan documents were in Deutsche’s custody prior to the date when the first notice of foreclosure sale was published.
Having determined that MERS, and not Deutsche, held legal title to the mortgage on Ms. Schwartz’s home mortgage as of May 3, 2006, when the notice of the foreclosure sale of her home was first published, it follows that Deutsche did not have the right to exercise the statutory power of sale and to foreclose the mortgage. See, e.g., Novastar Mortgage, Inc. v. Safran, 79 Mass.App.Ct. 1124, 948 N.E.2d 917 (2011) (finding, in a post-foreclosure eviction proceeding, that the foreclosing entity had the burden to prove its title to the property by establishing that the mortgage had been assigned to it by MERS “at the critical stages of the foreclosure process.”). By publishing notice of the foreclosure sale when it was not the mortgagee, Deutsche failed to comply with Mass. Gen. Laws ch. 244, § 14, and thus its foreclosure sale is void. Ibanez, 438 Mass. at 646-47.5 A declaratory judgment to that effect shall enter on count I of the complaint.
SO ORDERED.
Full opinion below…
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4closureFraud.org
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http://www.ritholtz.com/blog/2011/08/mass-bankruptcy-judge-voids-foreclosure-of-mers-mortgage/
another one to watch:
http://lawyersletters.com/?p=234
I say: Oh happy day, OH HAPPY DAY….
This is a bad decision based upon a misreading of law pertaining to mortgages. The court here rules that where a bank is named on a mortgage note and another party is named on the mortgage, the mortgage must be assigned to the holder prior to filing foreclosure. This case is another illustration of the unending mischief caused by the “MOM mortgage” which stands for MERS on the mortgage.
The court never addressed the real legal issue of a MOM mortgage, namely, whether a mortgage arrangement which names the originating bank of the mortgage note and MERS on the mortgage is enforceable or whether the split between the parties makes the mortgage debt payable to one party as creditor but confers the remedy of foreclosure upon another party. Can a mortgage and note be split in this way and retain the remedy of foreclosure. Is there a difference between a lien theory jurisdiction and a title theory jurisdiction? In a title theory jurisdiction, who has legal title to the property? Who has equitable title? Can equitable title suffice to exercise the remedy of foreclosure?
Here the court ignored these questions and hared off in the wrong direction. This is one more decision holding that a mortgage can only be conveyed by the mortgagee by assignment. This sis legally incorrect. There are many different ways a mortgage can be transferred. Over and over again, the courts are con fused by the distinction between a conveyance requirements for a negotiable promissory note and the conveyance requirements for an enforceable mortgage. See the excellent discussion of the difference in the Meers case in Illinois, a bankruptcy case.
The facts submitted by the creditor in this case, clearly show that the trust owns the note. The court ignores the fact that the mortgage follows the note. The mortgage secures payment; the note obligates payment. The trust is the holder of the note, legally and beneficially. Foreclosure is a remedy protecting the interests of the owner of the mortgage note as a secured creditor. Only the owner of the note may foreclose, The real question I the instant case should have been does the trust own the note as a matter of fact. The court should not have concluded it does not own the note as a matter of law.
The trust presented documentary evidence of how it acquired the mortgage note and the right to be secured by the mortgage. The defense showed that there was a conflict in the documentation. The mortgage named MERS but the assignment documents named the trust. The question still remains who is the true owner of the note. The answer is to be concluded from the weight of the evidence submitted by the parties.
In this case, it is noteworthy that additional evidence could have been but was not submitted by the trust. The trust’s servicer has electronically stored information which documents monthly mortgage payments by the debtor to the trust. What I am suggesting is the “real party in interest” doctrine used in bankruptcy and stated in UCC comments should be universally applied by the courts. No one challenged the right of the trust to receive the monthly payments. Accordingly, the trust is the real party in interest and entitled to be treated as the secured creditor with the right to foreclose i
Was my case similar? Mers had assigned my mortgage to IndyMac just prior to foreclosure. It seems they had bought it from Duetsche Bank who had bought it from GMAC in October of ’06. If ron Paul gets elected it should solve all federal reserve Mafia problems with the big banks, Right!?
How can Deutsch Bank purchase it from GMAC which is owned by Deutsch Bank? What am I missing?
Who had the authority over Eric Schneiderman?