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COMMONWEALTHF ~ ~ S S A C H U S E T T S
SUPREMEUDICIAL COURTSUFTOLK, ss . NO . 10694
I1.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR T I E
STRUCTURED ASSET SECURITIES CORPORATION MORTGA GE PASS-TIIROUGII CERTIFICATES, SERKS 2006-2,
Plaintif-App pellunl,
V .
ANTONIO IRANEZ,
Defendant-Appellee.
WELLS FARGO BANK, N.A.,AS TRUSTEE FOR AllPC 2005-OFT 1 TRUST,U F C ASSKI' BACKED CERTIFICATES SEIUES 200S-OPT I,
Pluint#Appellant,V
MARK A. LARACE AND TAMMY L. JARACE,Defendants-Appellees.
ON APPEAL FROM A JUDGMENT OF THE AN D COURT .
BRXEF OF TIW ATTORNEY G E N E W ON BEHALF O F THE
C O M M O ~ A L ' l W P MASSACHUSETTS, AMICIJS CURIAE
MhRTHA COAKLEYAlhrney General
John M. Stephan (UUO No. 649509)
Assistunt Attorney GeneralPublic Protection and Advocacy BureauConsumer Protection Division
One Ashburton Place, 18thFloorBoston, Massachusetts 02108-1598
(617) 727-2200 ext. 2959
Scptembcr 20,2010
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T a b l e of C o nt e nt s
T,able of Contents ..................................... i
Table of Authorities ................................. iii
Issues Presented ...................................... I
1nterest.s of the Amicus Curiae’ . . . . . . . . . . . . . . . . . . ...
Statement of th.e Case ................................ 2
Statement of the Relevant Facts ....................... 4
Summary of the Argument . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Argument . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1. PlainLiffs had no l e g a l authority to foreclbse
because they were n o t the original mortgagees,
were not authorized by the power of sale, and
because they lacked valid assignmentsof the
Ibanez and LaRace mortgages .................... 11
A. Plaintiffs are not the mortgagees of theIbanez or LaHace loans .................... 13
l3. Neither pl.aintiff was authorized by the
power o f sale in the respective mortgages . 16 C. The assorted securi,tization ocuments do not
establish or comprise valid assignments . . . 17
11. Not o n l y did plaintiffs lack legal authority to
foreclose, but the foreclosures are invalid
because the notices published prior to
foreclosure are fataI3.y .deficient . . . . . . . . . . . . . 20
A. G. 1,. c. 244, 5 14 requires that the noti.ce
identify the “present holder” of the
mortgage .................................... 1
B. Plaintiffs’ false identification o f
themselves as the “present holders” in their
i
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foreclosure n o t i c e s renders the notices
f a ' t a l l y deficient: . . . . . . . . . . . . . . . . . . . . . . . . . 23
I11 . Plaintiffs' argument that th ey held th e mortga ges
notwithstanding the lac k of valid. written
assignments t is of the date of. he foreclosures i s
unsupported by law .............................. 24
IV There are no grounds on which to limit the Land
Court's decision t o f u t u r e cases . . . . . . . . . . . . . . . 2 7
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ii
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Table of Authorities
Casea
AtJ.a*ltir. Sav. Bank v. Ietropolitan.. . Bank &'Trust,
9 Mass. App. Ct. 286 (198.0) ........................ 14
BottomLy v. Kabachnick, 13 Mass. App. Ct. 480
(1982) .................................... 12, 22, 21 , 28
Commonwealth v. Adams, 416 Mass. 558 (1993) . . . . . . . . .2
-XCommonwealth v. Mass. C R I N C , 392 Mass. 79 (1984) . . . . . 1
Cousbelus v. Alexander, 315 M.ass 729, 730 (1944) . . . 15
I. . Flavin v. Morrissey, 327 Mass. 217 ( 1 9 5 1 . ) . . . . . . . . . . . 1.6
Hanna v. 'Town o f Fram&ham, 60 Mass. App. C L . 420(2004) ............................................. 14
Linsky v . Exchange Trust Co., 260 Mass. 15
(1927) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 , 1,5
Lowell Gas Co. v. Attorney General, 377 Mass. 37
.. ~ " ~,
(1.979) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Macurda v . Fuller, 225 Mass. 341 (7 .916) . . . . . . . . . . . . . 6
McGceevey v. Charlestown Fi ve Cents~....... Sav. Bank, 294
Mass. 480 (1936) ............................ 12, 22, 24
Milton.- Sav. Bank v . United States, 345 Mass. 302
(1963) ................................................ 21
Moore v. . Dick, 187 Mass. 207 (1905) ......... .2, 22, 24
Murphy v. Charlestown Sav.- Bank, 380 Mass. 738
(1980) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
-
Fer= v. Miller, 330 Mass. 2 6 1 (8.953) . . . . . . . . . . . . . . 4
Roche V. Farnsworth, '106Mass. 509 (i871) . , 12, 22,. 4
Seppala & Aho Constr. C n . v. Petersen, 373 Mass.
316 (1377) . . . . . . . . . . . . . .. . . . . . . . . . . . . .. . . . . . . . . . . . . 2 5
iii
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Spraque v. K j . m b a l 1 , 213 Mass. 300 (1913) . . . . . . . . . . . .15
States Resources C o g . v . T h e A r c h i t c r A u r a l, .- Team,Inc., 4'33 F.3d 7 3 (1st Cic. 2 0 0 5 ) . . . . . . . . . . . . . . . ...21 _I_
Warden v. A d a m s , 35 Mass. 2 3 3 (1818) ............ 4, 15
S atu fes
G. 1,. c. 183, 5 21 ............................ 5 , 12, 1'1
G. 1,. c. 240, 5 6 .................................... 2
G . L . c. 244 , 5 1.4 .............................. passim
G . L. c. 259 , 5 1 .................................... 15
5 0 U . S . C . app . ' 5 3 ' 5 0 1 - 5 9 6 ............................. 7
i.v
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Issues P resen t ed
1. Whether a party has the legal authoriLy to
foreclose on a mortgaqe if it does not have a n
interest in the mortgage at the time of the
foreclosure.
2. Whether a foreclosure n o k i c e t h a t [ails to
identify the present holder of a mortgaqe is l e g a l l y
suff ci.ent. even though the .identification f the
present holder is required by G. L. c. 244, 5 14.
3. Whether the Land Court's interpretation of
longstanding Massachusetts statutory requirements
shou1.d be rejected or .limited solely because
significant costs to t h c plaknkiffs will result.
I n t e r e s t s of t h e Amicus Curiae
The AtLorney.Genera1 has 'broad common law and
statutory powers to represent the public interest."
Commonwealth v. Mass.. CRINC, ,392 Mass.' 79, 8 8 (1984) .
She has both a general statutory mandate and, in many
instances, a specific statutory mandate, to protect
the public interest. -d. In additj-on, the Attorney
General h as a common law duty to represent the public
interest and,to nforce public rights. Lowell Gas Co.
v. Attorney General, 377 Mass. 37, 4 8 (1979).
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The Attorney General is “ a n elected official
charged wi.th the duty of protecting the public
interest.“ Commonwealth v. A d a m s , 416 Mass. 558, 5 6 6 -
67
Attorney General has a profound i n t e r e s t : in t h e
enforcement of statutory requirements, andin the
enforcement if consumer protection statutes in
particular. Moreover, as the Commonwealth’s attorney-
in-chief, the Attorney General has an interest in
ensuring real property interests are conveyed
efficiently and accurately in the Copmanwealth. ‘.l’his
is particularly so where Massachusett-s law permits the
transfer of real property without. judicial.
involvement. In the absence of this supervision,
(1993) . ‘ A s the ch.ieflaw enforcement officer, the
strict compliance with the statutory requirements is
the only means to ensure the accuracy of public land
records and the integrity of the syst.emfor t.ransfer
of real property.
Statement o f the Case
The actions at issue here oriqinatcd in the Land
Court, where they were filed as independent actions
“to remove a cloud on tj.tle” u r s u a n t to G. I,. c . , 240 ,
5 6. , [ A 1 7 - 2 5 ] . In those actions, plaintiffs soughta
2
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d e c l a r a t i o n. t h a t t h ey 'h ad pu b li .s he d t h e r e q u i r e d
f o .r e c lo s u re n o t i c e s i.n a n a c c e p t a b l e p u b l i c a t i . o n . -d .1
A f t , e r t h e t i m e Lo f i l e a r e s p o n s e e x p i r e d ,
p 1 , a i n t i f f s m o v e d for e n t r y of d e f a u l t j u d g m e n t s .
[ A 5 8 0 ] . The a c t i o n s w ere c o n s o l i d a t e d a nd t h e L and
C o ur t r e q u e s t e d b r i e f i n g on t h e i s s u e of .whether : t h e
. p l . a i n t i f f s were t h e i e g a l h o l d e r s o f t h e m or tg ag e, s a n d
w h et he r t h e n o t i c e s of s a l e c om p li ed . w i t h G . L .
c. 2 4 4 , 5 1.4. L A 5 7 8 - 7 9 1 .
O n March 26, 2009, t h e Land Cour t i s sued a
M em 0rand.m a nd O rd e r de ri yi ny p l a i n t i f f s ' m o t i o n s f o r
e m t ry of d e f a u l t ju dy m en t a n d found t h a t t he
f o re c l. o su r es w ere i n v a l i d b ec a us e t h e n o t i c e s f a i l e d
t o . n a m e t h e m o r t g a g e h o l d e r a s of t h e d a t e o f s a l e as
r e q u i r e d by ti. 1,.c. 2 4 4 , 5 14. [ A 5 7 4 - 9 3 ] . Judymenl:
' t o t h a t e f f e c t WAS en t e red . [ A 5 9 4 - 9 5 ] . T h e r e a f t e r ,
t h e p l a i n L i f f s f i l .e d m ot io ns t o v a c a t e t h e judgment .
[ A 5 9 6 , 6371. The Land Court denj.ed t h e s e m o t i o n s a n d. ,
r e a f f i r m e d i t s p r i o r j u d q m e n t . [ A 1 1 3 6 ] .
The p r o p e r t i e s s e c u r i n g . t h e I b a n ez a n d LaR ace
m o rt ga ge s a r e l o c a t e d i n S p r i n g f i e l d , M a s s a c h u s e t t s .The p l a i n t i f f s f i l e d t h e i r n o t i c e s o f i n t e n t to
f o r e c l o s e i n t h e Bosto n G lobe, which t h e :l,a'nd Co urt
found was "a newspaper of g e n e ra l c i r c u l a t i o n " i n
, S p r i n g f i e l d . . : t ' h i s . i s s u e i s n o t r a i s e d by a ny p a r t y ona p p e a l . [ A 5 7 7 - 5 7 9 1
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On October 30, 2009, plaintiffs filed notices of
appeal from t h e Land Court's orders and judgments
against them. [A1163-661.
On March 22, 2010, the Supreme Judicial Court
granted direct appellate review..
Statement of the Relevant F a c t s
The relevant facts were succinctly s e t forth in
th e 'Land Cour t ' s Memorandum and Order on P l a i n t i f f s '
Motions to Vacate Judgment. [A1136-1162]
The facts concerniny Lhe Ibanez and LaRace
mortgages are substantially similar. Both involved
adjustable-rate, subprime loans for the purchase of
residential property in Springfield. [ A l l 4 ' 1 1 . In
both, t h e borrower signed a promissory note arid gave a
mortgage to a lender, whi.ch was immediately recorded.
-Id. Rose Mortgage was the original lender far the
'Ibanezmor tgage and Option One Mort-gage Corporation
was the original lender for the LaRace mortgage. Id.
Rose endorsed the.Ibanez note and properly
assigned the mortgage t o Option One. -d. Option One
then.executed an endorsement of both promissory notes
in blank, makiny each "payable.to bearer" and
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“ n e g o t i a t ed by t r a n s f e r a lo n e u n t i l s p e c i a l l y .
e n d o r s e d . ” -d . , c i t i n g G . L . c . 106, 5 3 - 2 0 5 ( b ) .
I n b o t h cas es , Opt ion One aJ.so e x e c u t e d a n .
a s s i g n m e n t o’f h e m o r t g a y c i n b l a n k (i.c.,... w i t h o u t a
s p e c i f i e d a s s i g n e e ) . - _ Id . T h e s e blank mortgage
a s s i g n m e n t s w e re n e v e r r e c o r d e d a n d were n o t l c g a l l y
r e c o r d a b l e because t he y f a i l e d to i d e n t i f y t h o
a s s i g n e e . S e e G . Id . c. 183 , 5 6C ( a s s i g n m e n t m u s t
i d e n t i f y t h e a s s i g n e e i f it is t o be r e c o r d e d ) .
S e c u r i t i z a t i o n.. o f t h e J b a n e z Mortgage, . .
A f t e r Opt ion One e nd or se d t h e n o t e s i n ’ b l a n k , i t
s o l d t h e m o r t g a g e s . [A1118]. 0 p t i . m O n c s o l d t h e
. I b an ez mor tgage t o Lekman Bro the . r s . -d . Lehman
B r o t h e r s t h e n s o l d t h e m o rt ga ge , t o g e t h e r w i t h
hundreds of o t h c r loans, t o S t r u c t u re d A s s e t
S e c u r i t j , e s C o r po r at j. o n (“SASC”) -d . SASC t h e n s o l d
t h e s e l o a n s t o t.he S t r u c t u r e d A s s e t Secu r i . t i e s
Corpora t j .on Mor tgage Loan T r u s t 2006 - 2 , of which
p l a i n t i f f U . S . . Bank N a t i o n a l A s s o c i a t i o n (“U.S. Bank”)
was t h e t . r u s t e e . I d ..-
A l l of t h e s u p p o r t i n g d o cu m en ts c o n c e r n i n g t h e
Ibanez mor tgage were p l a c e d i . n t o a , c o l l a t e r a l f i l e ”
and presumably were t r a n s f e r r e d b et we en t h e e n t i t i e s
5
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I . i s t e d a b o v e as c a ch t r a n s a c t i o n was c o m p le te d:
[ A 1 1 4 Y l . T h i s c o l l a t e r a l f i l e c on ta in ed t h e o r i g i n a l
p r o m i s s o r y n o t e , t h e Hose M or tg a g e e n do r se m e nt o f t h e
p r o m i s s o r y n o t e t o O p ti o n O ne, O p t i o n One's b l a n k
endorscmcnt a f t h e p r o m i s s o r y . n o t e , t h e mo rt ga ge
i s s u e d Lo Rose Mor tgage , Lnc . , t h e a s s ignmen t of th e
morLgage from Rose t o Option One , and Op' t ion O n e ' s
b l a n k mortgage a s s i g n m e n t .
S e c u r i t i z a t i o n o f t h e - aRace Mortgage
...d.
Option One sold th e LaRace mortgage t o B a n k of
. A m e r i c a . -'d . Bank oFAmerica s o l d t h e LaKace
m o r tg a g e t o g e t h e r w i t h h u n d re d s o f o t h e r - l o a n s to
A s s e t B a c k e d F u n d i n g C o r p o r a t i o n ( "ABFC") . CA1149-
I l . S O ] . A BF C Lhcn s o l d t h o s e l o a n s t o t h e A B F C 2005-
OI''l'1 T r u s t , of w h i c h p l a l , n t i f fW e l l s
Fargo B a n k , N . A ; ,
( 'W ells Fargo") was t h e t r u s t e e . [A1150].
J u s t as w i t h . t h c I ha ne z m o rt ga ge , t h e e s s e n t i a l
l o a n do cu m en ts , i n c l u d i n g t h e LaRaces ' mor tgage and
o r i g i n a l promissory n o t e , O p t i o n O n e ' s . b l a n k
endorsement of t h e p r o m i s s o r y n o t e , a nd O p t i o n O n e 's
endorsement of t h e mortgage i n b l a n k , w e r e c o n t a i n e d
i n a " c o l l a t e r a l f i l e " t h a t was p r es u m ab l y p a s s e d f ro m
p a r t y t o p a r t y a s t h e l o a ns w e r e s o l d . I d .
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The Forec losu re s .
A f t e r b o t h t..? I b a n e z and LaRace ian s became
d e l i n q u e n t , t h e f o r e c l o s u r e p r o c e s s be ga n. [ A 1 1 5 3 ] .
The l o a n s were r e f e r r e d t o c o un s el w i t h i n s t r u c t i o n s
t o b r i n g f o r e c l o s u r e a c t i o n s a g a i n s t t h e d e f en d an t s .
[A1153-541. T h e r e a f t e r , p l a i n t i f f s f i l e d
S e r v i c e m e b e r s C i v i l R e l i e f A c t c o m p l a i n t s a g a i n s t M r .
I h a n c z a nd t h e L a R a ce s. CA1154-551 .
The I b an e z c o m p l a i nt i d e n t i f i e d U . S . Rank as “ t h e
owner (or assignee). a n d h o l d e r o f a m o r t g a g e w i t h a
s t a t u t o r y pow er o f s a l e . ” [ A1 15 4] . Thc N o t i c e o f
Mor tgagee ‘ s Sa le of R e a l E s t a t e was p u b l i s h e d . x.T h is N o t ic e s t a t e d t h a t U.S. Bank was t h e “ p r e s e n t
holder ‘ : o f t h e Ibanez mor tgage . -d. T h e I b a n e z
F o r e c l o s u r e s a l e was c o n d u c t e d on J u l y 5., 2007 . i n t h e
name o f U . . S . Rank. On Septcmher 2 , 2008 , some
. ’ The Servicemembers C i v i l R e l i e f A c t ,o f 2003 , f o r m e r l y
known a s t h e S o l d ie r s ’ and S aj.Z ors‘ C i v i l R e l i e f A c t
of 1.940, i s a f e d e r a l law t h a t p r ov i de s p r o t e c t i o n s
f o r m i l i t a r y m embers w h i l e t h e y a r e on a c t i v e d u t y .
50 U . S . C . app. §§ 501-596. P u r s u a n t t o t h i s A c t , a
f o r e c l o s i n g p a r t y m u s t o b t a i n a j u d i c i a l r u l i n g t h a t
t h e b o r r o w e r i s n o t o n a c t i v e m i l i t a r y s e r v i c e p r i o rt o f o r ec l o su r e . G . Because Massachusetts.is a non-
j u d i c i a l f o re c lo s u r e j u r i s d i c t i o n , t h i s i s t h e extentof court i nv ol ve m en t i n a t y p i c a l f o r e c l o s u r e i n t h e
Commonwealth.
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f o ur te e n . m o nt h s a f t e r t h e ' f o r e c l o s u r e s a l e , Ameci.can
Home Mortynge Servicing, Inc. ( t h c p u r p o r t e d s i ic c es so r
i n i n t e r e s t t o 0 ptj .on One) a s s ig n e d t h e I b a n e z
mor tgage t o U . S . Bank. [ A 1 , 1 5 5 1 .
The LaR ace c o m p l .a i nt i d e n t i f i e d W e l l s Fargo a s
t h e "owner (or a s s i. g n e e) an d h o l d e r ' o f a mortgage w i t h
a s t a t u t o r y pow er o f salc." 1.d. The Notice of
M o r t g a ge e r s S a l e of R e a l E s t a t e was p u b li s he d . ' I d .
The N o t ic e s t a t e d t h a t W el ls Fargo was t h e " p r e s e n t
h o l d e r " o f t h e m o r tg a ge . -d'. 'The LaRace f o r e c l o s u r e
sale t o o k p l a c e o n J u l y 5, 2 0 0 7 in t h e name o f WeJ.1.s
k'arqo. 011 September , 2 , 2 0 0 8 , some f o u r t e e n m o n t h s
a f t e r t h c f o r e c l o s u r e s a l e , A m e ri ca n Home M o rt ga ge
S e r v i c i n g , I n c . ( t h e p u r p o r t c d s u c c e s s o r i .n i n t e r e s t :
t u Opt io n One) a s s iy nc d th e LaRace mor tgage t o 'Wells
F a r g o . ' r A 1 1 . 5 6 1 .
Summary of the Argument
The Land Court was corrccl . t o i n va l - i d a t e t h e
f o r e c l o s u r e s . n two d i s t i n c t g r o u n d s .
F i r s t , t h e p l a i n t i f f s 1.acked t h e l e g a l a u t h o r i t y
t o c on du ct t h e f o r e c l o s u r e s b e ca u se t h e y w ere n o t
among t h e p a r t i e s a u t h o r i z ed t o d o s o under e i t h e r t h e
s t a t u t o r y power of s a l e or under G : L . c . 2 4 4 , § 1 4 .
8
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Second, even if the pl.ai.ntiffs ad had the l e g a l
authority to foreclose (which they did not) the
foreclosures would still have been i.nva1i.d because the
n0tice.s issued by the plaintiffs failed to name the
present holder of the mortgage as 'required under:G . Ti.
c . 244, 5 14.. ,
!Co foreclose on a mortgage securing property in
the Commonwealth, one must be the holder of the
mortgage. To be the holder of the mortgage, one must
be the original mortgagee or bc the assignee under a
valid assignment of the mortgage. It is' ot
sufficient to possess the mortgagor's promissory note.
The Land Court correctly held that the plaintiffs,
U.S. Bank and Wells Fargo were not holders. f the
l b a n e z and LaRace mortgages at the time o f foreclosure
because they were not assignees of valid assi9nment.s
of the mortgages. Without valid assignments, the
pl.ai.ntiffs lacked the legal authorityto foreclose the
mortgages'. T h i s , without more, is sufficient grounds
on which to invalidate the foreclosures and theLand
Court was correct to do so.
. ..
In addition, the foreclosures were properly
invalidated for the plaintiffs' failureto comply-with
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the notice requirements set forthin'G. L. c. 244,
S 14. Chapter.244, 5 14 une'quivocally requires that
the foreclosure notice must identify the present
holder of the mortgage at the time of foreclosure.
The plaintiffs' notices falsely identified the
plaintiffs as the present holders of the Ibanez and
LaRace mortgages.. Without valid assignments of the
mortgage. s o f the time of foreclosure, the plaintiffs
were not in f a c t the holders of the mortgage.
each notice is fatally deficient a n d the Land Court
T h u s ,
correctly invalidated. he foreclasurcs.
Plaintiffs' claims that the Land Court's ruling
w i l l cause widespread confusion or significant cost to
innocent parties are greatly exaggerated, and such
reasoningdoes n o t w a r r a n t
ignoring thep l a i n
requirements of the law designed to protect
Massachusetts consumers. Indeed, itis t h e
foreclosing entities themselves who will bear the
greatest. ost of clearing title from their invalid
. .
foreclosures. Having profited greatly from practices
regarding .the assignment and securitization of
mortgages not grounded in the law, it is reasonable
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f o r them to bear the cost of failing to enslire that,
such practices conformed to Massachusetts law.
Argument
P l a i n t i f f s had no legal a u t h o r i t y t o f o r e c l o s ebecause t h e y were n o t t h e orig inal mortgagees ,
were not authorized by the power of sale, and
. . because they lacked v a l i d ass.ignrnents of the
Ibanez and LaRace mortgages.
It j.s axiomatic that a party cannot foreclose a
I.
.mortgage without t h e legal authority to do so. To
have lcyal authority to foreclose, one must be
authorized by the power of sale set forth in the
mortgage and must be liskcd among the authorized
p e r s o n s in G . L. c. 244, 5 3.4. In this case, only the
mortgagee or its valid. assignee has that authority.
As the Land Court found, neither U.S. Bank nor Wells
' Fa rgo was the mortyigcc of the respective J-oans at the
time they sought to f'orecloseas the mortyagees, nor
was either the assignee under a valid assignment. of
the mortgage at the time of foreclosure. Accordingly,
neither U.S. Ban k nor Wells Fargo had the legal
authority to foreclose the Ibanez and LaRace
mortgages.
Chapter 2 4 4 , .'3 14 identifies a narrow group of
persons who may foreclose. That group includes the
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mor tgagee , a p e r s o n . a u t h o r i z e d by t h e p ower o f sale,
a n a t t o r n e y d u l y a u t h o r i z e d by a w r i t i n g u n d er s e d ,
t h e m o rt ya ge c” s l e g a l g u a r d i a n ox c o n s e r v a t o r , o r a
p e rs o n a c t i n g i n t h e n a m e of s u ch m o rt g ag e e o r p e r s o n .
S e e G . L . c . 2 4 4 , 5 14.~
The s t a t u t o r y power of s a l e i n c o rp o r a te d by
re fe rence i n t o t h e l ha ne z a n d LaRace mor tgages i s
c o d i f j .e d a t G . L . c . 183 , § 2 1 , and s t a t e s t h a t o n l y
“ t h e m o rt ga ge e o r h i s e x e c ut o r s , a d m i n i s t r a t o r s ,
s u c c e s s o r s o r a s s i g n s ” may e x e r c i s e t h e power of s a l e .
G.. I,. C. 183, § 2 1 .
T he se a r e n o t mere g u i d e l i n e s or s u g y c s t c d
p r a c t i c e s . S t r i c t c o m p li a nc e w i t h t h e r e q u i r e m e n t s of
b o t h t h e p ow er of s a l e and G . L. c . 244, 5 1 4 i s
r e q u i r e d . M o o r e v .~
D i c k , 1 8 7 Mass. 207 , 213.-23.2
(1905); Rot tomly v . Kabachn ick , 13 Mass. App. C t . . 4 8 0 ,
4 0 4 ( 1 9 8 2 ) . See a1.so McGreevey v. Ck ar lc s tow n Fi ve
Ce’nLs, Sav. B a n k , 294 Mass. 480, 481 (1936)
( f o r e c l o s u r e s a l e i n v a l i d w here power o f . s a l e r e q u i r e d
a d v e r t i s e m e n t i n S u f f o l k C ou nt y a nd s a l e i n B os to n,
b u t m o rt ga ge e a d v e r t i s e d and s o l d i n Medford, where.
p r o p e r t y was l o c a t e d ) ; “11oche v. Farnswor th , 1 0 6 Mass.
509, 513 (1871).
-~
1 2
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Thus , t o have l e g a l a u t h o r i t y to f o r e c l o s e ,
p l a i n t i f f s m ust e i t h e r be t h e m ortgayces of t h e
r e s p e c t i v e l o a n s o r h o l d v a l i d a s s ig n m e nt s o f t h e
l o a n s .
p e r s o n s a u t h o r i z e d by t h e s t a t u t o r y power of s a l e a t ,
t h e t im e of t h e f o r e c l o s u r e s , and b ec au se t h e y w ere
n o t v a l i d , a s s i g n c e s of t h e m o r tg a ge s , t h e y l a c k e d t h e
B ecause p l a i n t i f f s were n e i t h e r m o r tg ag ee s n o r
l e g a l a u t h o r i t y t o f o r ec l o s e , and t h e f o r ec l o su r e s a r e
v o i d a s a m a t t e r of law. 3
A . Plaintiffs a r e not the mortgagees of . t h e . .
Ibanez or LaRace loans.
T o b e a mortgagee , one mus t e i . t he r be t h e
o r i g i n a l l e n d e r o r b e t h e a s s i g n e e u nd cr a v a l i d
a s s i g n m e n t o f t h e m o r t g a g e . A p a r t y who i s n o t t h e
o r i g i n a l l e n d e r can o n l y o b t a i n t h e lega l . r i g h t s of a
m0r tqage . e th rough Lhe v a l i d a s s iqnmen t o f t h e
m o r t g a g e . N e i t h e r U.$. Bank 1101' Wells Fargo was th e
o r i g i n a l l e n d e r of t h o r e s p e c t i v e l o a n s . N o r w a s
P l a i n t i f f s do n o t e ven a rg u e t h a t t h e y a r e
" s u c c e s s o r s " o r ' h a t t h e y " a c t ' i n t h e name o f " t h e
m o rt ga ge e, an d r i g h t f u l l y s o . N e i t h e r U.S. B a n k n o r
W e l l s ' F a r q o h ad , a t t h e t i m e o f f o r e c l o s u r e , a c q u i r e d
t h e a s s e t s o r l i a b i l i t i e s o f t h e h o l de r of t h emor tgages . Nor c o u l d U.S. Bank o r Wells Fargo
p l a u s i b l y c o n t e n d t h a t t h e y were a c t i n g " i n . t h e name
o f" t h e h o l d er of t h e m o r t g a g e s , p a r t i . c u l a r l y w h e r e
t h e f o r e c l o s u r e no . t ic es i d e n t i f y t h e p l a i n t i f f s acLirig
i n t h e i r own c a p a c i t y a s t h e f o r e c l o s i n g p a r t i e s .
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e i , t h e r p l a i n t i f f an . a s s i g n e e u n d e r a v a l i d a s s i gn m en t
b e c a u s e , a t t h e L i m e of t h e f o r e c l o s u r es , n e i t h e r U.S.
Bank nor Wells Facgo h e l d a w r i t t e n s t a t e m e n t
c o n v e yi n g t h e m o rt g ag e t h a t s a t i s f i e d t h e S t a t u ' t e o f
Frauds o r e ve n t h e m o st b a s i c of c o n t r a c t u a l
r e q u i r e m e n t s . S e e L i n s k y v ; _.xch. qe T r u s t C o . , 26 0
Mass. 1 5 ( 1 9 2 7 ) (agreement t o g i v e o r a s s i g n a m o rt g aq e
i s an agreement t o convey an i n t e r e s t i n l a n d and must
b e w r i t t e n ) ; Warden."" v. Adams, 15 Mass. 233 ( 1 8 1 8 )
( same) .
111 M a s s a c h u s e t t s , "[a] mortyage of r e a l e s t a t e i s
a conveyance of t h e t i t l e o r of some i n t e r e s t ' t h er e .i .n
d c f e a s i b l e upon t h e paym ent 0.f money o r t h e
pe r fo rmance of some o.Lhcr c o n d it i o n ." Murphy v.
Cha r le s town Sav . ,.B a n k. .,- 380 Mass. 7.30, 7 4 7 ( 1 9 8 0 ) . I n
a m oct qa ge t r a n s a c t i o n , t h e m o rt ga go r t r a n s f e r s all
l e y 2 1 t i t l e t o t h e m o rt ga ge e, r c L a i n i n g o n l y t h e
" e q u i t y o f r e d em p t io n , " u n t i l t h e m o rt ga ge i
s a t i s f i e d 'o r f o r e c l o s e d . . ~S e e P e r r y v. M i l l e r , 330
Mass. 2 6 1 ( 1 9 5 3 ) ; Hanna v. Town o f Framingham,- 6'0
Mass. App. C t . 4 2 0 (20011) ; At lan t i c-- Sav. Bank v.
M e t r o p o l i t a n B a n k_..ll.- & T r u s t , 9 Mass. App. C t . 286
(1980). A c c o r d i n g l y , t h e a s s i g n m e n t o f a mor tgage is a
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conveyance of a.lega1 estate in the mortgaged
premises. It j.s the transfer of an j.nEere:st n real
property and the Statute o f Frauds requires that any
assignment of the mortgage be in writing. Warden v.
Adams, 15 Mass. 233 (1018).
To convey real p r o p e r t y one must have a written
agreement that contains the fundamental elements ofa
contract and complies with the Statute of Frauds. ~See
.G.L. c. '259,5.1; i n s k y v. Exchange,- - Trust Co., 260
Mass. 15'(%327)(agreement to give or assigna mortynye
is an agreement to convey a n interest in larid and must.
be wr.it'c.cn); prague v. Kimball, 213 Mass. 380 (1913):The written instrument "must contain the termso f the
contract agreed upon - t h e parties, the locus (if an
i-nterest in real estate is dealt with), in some
circumstances the price, and it must be signed by t-he
party to be charged or by someone authorized tu s i i g r i
on his behalf." Cousbelus v. Alexander, 315 Mass729,
./30 (1944) (internal quotations. mitted). An
assignment that does not contain these essential
components is invalid. ISee id.' T hus , to be the
holder of a valid assignmentof a mortgage, one must
hold a written agreement that includes,at: a minimum,
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t h e n a m e s o f a l l p a r t i e s t o t h e c o n t - c a c t a n d a n
i d e n t i f i c a t i o n of t h e s u b j e c t p r o p e r t y , and i s s i g n e d
b y t h e p a r t y t o be cha rged . A t no t i m e p r i o r t o t h e
f o r e c l o s u r e s d i d p l a i n t i f f s possess such a n . .
a s s i g n m e n t .
. .
Th e r e c o r d . r e v e a l s t h a t n c j t h e r U:S: Bank n o r
Wells F a r g o h a d r e c e i v e d a f u l l y - e x e c u t e d a s s i g n m e n t
p r i o r t o t h e f o r ec l o su r e s a l e s . ’ A t most , e a c h
p o s s e s s e d t h e a s s i g n m e n t s executed i. n bla nk b y Opt ion
One p r i o r t o t h e s e c u r i t < . z a t i o n o f t h e l o a n s . N e i t h e r
of t h e s e a s s i g n m e n t s i d e n t i . . f i e d a n a s s i g n e e .
Indeed , n e i t h e r p1. ai .n ti .f f i s i d e n t i f i c d on t h e s e
p u r p o r t e d “ a s s i g n m e n t s . ” Nowhere on t h e s e d o c u m e n t s
do t h e w ords “U.S. Bank” o r “Wells Fargo“ appea r .
Unde r Massachuse t t s l aw , s u ch “ a s s i g n m e n t s i n b l a n k ”
t r a n s f e r n o t hi n g t o no o ne . See t.’l.avin v . M o r r i s s e y ,
327 Mass. 2 1 7 , . 2 1 9 (1951.) ; Macurd2 v . F u l l c r ,... .... . 225
Mass. 3 4 1 , 344-45 (1916). Thus, a t t h e t i m e t h e y
p u r p o r t e d t o f o r e c l o s e , n e i t h e r p1 .a in ti .f f was t h e
mor tgagee of t h e r e s p e c t i , v e l o a n s .
B. Neither p l a i n t i f f was authorized by t h e
power of sale in the respective mortgages.
Ne i the r . .U .S . Bank no r Wells E’acgo i.s among thosc
p a r t i e s a u th o r i z ed t o e x e r c i s e t h e s t a t u t o r y power o f
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sale incorporated into the Ibanez and' aRacc
mortgages. The only persons w h o may exercjse the
power of s a ' l e are "the mortgagee or his executors,
administrators, successors OK assigns." G.. . c. 103,
5 21. Because neither plaintiff is a mortgayeen o r
was either an assignee under a valid assignment at: the
time they foreclosed and sold t h e properties, each
l a c k e d authori.tyto exerci-se he power of sale.
C. The assor ted securitization documents do not
establish o x comprise valid assignments.
Plaintiffs contend that various securitization
documents constructj.ve1.y assigned to themthe I ba ne z
and LaRace mortgages. Specifically, the plaintiffs
contend that ' the Ibamz mortgaqe was assj-gnedto U.S.
Hank by way of a Trust Ayreemcnt tha.tr is not part of
the record, but is purportedly evidenced by a Private
Placement Mmnurandum. They contend thatWells Fargo
received t h e LaKace mortgage via a ' P u r c h a s e and Sa1.e
Agreement. In each case, plaintiffs' argument.is.
without merit.
1. The LaHace Securitization Documents.-
As the Land Court found, the LaRaces gave a
mortgage to Option One when the loan was initially
made. Thereafter, Option One executed an assignment
3. I
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of the mortgage "in blank," ~i.e., without naming the
party to whom the mortgage was to be a s s i g n e d . As'
detailed above and by the Land Court, this "assignment
I,n 'blank" was ineffective to transfer any interesti n
the mortgaycl.
Wells Fargo contends that the LaRace mortgage was
assigned to it by the Pooling 'and Servicing Agreement
it entered i . n to with Asset Backed Funding Corporation
("ABFC") This ayreement purports to transfer and
assign all of the rights o f ABFC to Wells Fargo.
However, thcrc is nothj g in the .record that indicates
that ABFC had any interest in the LaRace mortgage.
Thus, even if he languagc in the P o o l j . n g and
Servicing agreement was sufficient to transfer all of
A B F C ' s interests in the LaRace mortqage, the
assignment would be'ineffective because ABFC had nd
int-erest n the La'dace mortga- ..o,... -- Lransfer.
2. The Ibancz_ ~.-.ecuritization. Uocuments.
The .only valid assi.qnmentof .the Ibanez mortgage
p r i o r to the foreclosure sale was the assignment from
R o s e Mortgage, Inc. to Option One. There i . s no
evtdence that anyone else, much 1.es.r.S.. Bank,
acquired the Ibanez mortgage before foreclosure.
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. Indeed, t h e r e a r e o n l y two v a l i d a s s i gn m e n ts o f t h e
Ibar lez .mor tgage j , n t h e r e c o r d : Rose Mor tgage ' s
a s s i g n m e n t t o O p t i o n One and American Home Mortgages
S e r v i c i n q , Inc. s p o s t - f o r e c l o s u r e a s s i g n m e n t t o U. S .
' .
Bank.
U . S . Bank cl.a.ims i t becamc t h e h o l d e r of ' t h e
I b a n cz m o r t g aj e v i a a n u n d i s c l o s e d ' I ' r u s t Agreement
1J.S. Hank sta.Les t h a t t . h i . s document . : which was n e v e r
p roduced and i s n o t i.n t h e r e c o r d ... c o n t a i n s l an gu ag e
s i m i l a r t o t h e j .anguage i n t h e LaRace I?oolj .ng and
S e r v i c i n g A gree me nt. P l a i n t i f f s ' Hr. a t 1 9 .
1I.S. B a n k ' s rel i .ance on t h i s document i s
misp laced . Even i F t h e Trus t Agreement were i n t h e
r e c o r d a n d e v e n i.f i t co r i l a ined l anguage i .denti.cal t o
t h a t i n t h e LaRace Pool in g and Se rv ic in g Ayreemcnt,it
wou1,d s t i l l ,bc i n e r f e c t i v e t o a s s i g n t h c Ibanez
Inor'tyage hecause t t i c r c i s no evj.r lence t h a t t h e p a r t y
w h o s e i . n t e r e s t i n t h e m o rt ga ge i t purports t o t r a n s f e r
had a n y i n t e r e s t j n k h a t murlyage. .
The T r u s t Aqreenicnt a1legedl.y p u r p or t s t o
t r a n s f e r t h e i n t e r e s t s of S t ru c tu r ed A s s e t S e c u r i t i e s
C o r p o r a t i o n ("SASC") t o U.S. Bank a s t r u s t e e o f t h e
S L r u c t u r e d A s s e t Securi t ies Corpora t ion Mor tgage Loan
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T r u s t 2006 - 2 . '
owned by Option One, much ' l ess t h e I b a n e z m o r t g a g e .
T h e r e i s no e v i d e n c e of any ass i .gnmcnt f rom Option One
t o SASC. Thus, even i f : t h e Trus t Agreemen t were
I t does n o t p u r p o r t t o ' a s s i g n a ny th in g
e f f e c t i v e t o a s s i g n e ve ry i n t e r e s t S A X had i n t h e
Iba r iez l o a n i t wou1.d s t i l l be i n e f f e c t i v e b ec au se t h e
I b a n e z . oa n was nev er SASC'r; t o t r a n s f e r . 4
Thus, t h e L and C o u rt c o r r e c t 1 . y f ou n d t h a t t h e
p l a i n t i f f s foreclosed on M r . Ibanez and t h e LaRaces
w i t h o u t l e g a l a u L h o r i t y u n d e r e i t h e r G . L . c . 2 4 4 ,
5 1 4 o r t h e s t a t u t o r y power o f s a l e i n c o rp o r a te d by
r e f e r e n c e i n t o t h e m o r tg a ge s .
11. Not only did plaintiffs lack l e g a l authority to
foreclose, b u t the foreclosures are invalidbecause t h e notices published prior to
foreclosure are fatally deficient.
'Even if t h e p l a i n t i f f s had l e g a l a u t h o r i t y t o
e x e r c i s e t h c s L a t u to r y p n w e r of sale ( w h i c h t h e y d i d
n o t ) , th e f o r e c l o s u r e s w o u l d n o n . e t h e l e s s b e . i n v a l i d
b c c a u s e % h e n o t i c c s - of s a l e ' i s s u e d f a i l e d t o i d e n t i - f y
.."_I
I n dc c d, t h e v e r y f a c t t h a t b o t h p l a i n t i f f s s o u gh t
comple ted a s . s ignmen ts f rom O p ti on One a f t e r t h e
f o r c c l o s u r e s occurred c o n fi r m s t h a t t h e y t h em s e lv e s
b e l i e v e d t h a t t h e y l a ck ed v a l i d a s s i gn m en ts p r i o r t o
t h a t t i m e .
4
2 0
. . . -.
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t h e " p r e s e n t h o l d e r" of t h e Ibanez and I jaRace
mor tgages .
A . G . L . c . 2 4 4 , § 14 requires t h a t t h e n o t i c e
i d e n t i f y th e "pre sent holder"' o f t h e
mortgage.
C h a p t e r 2 4 4 , s e c t i o n 1 4 " p r e s c r i b e s t h e p r oc e du r e
i n t h e f o r e c l o s u r e of a mortgage of r e a l e s t a t e under
a p ow er of s a l e , an d s e t s f o r t h t h e fozm o f t h e n o t i c e
and t h e r e q u i r e m e n t s f o r i t s p u b l i c a t i o n . " M i l t o n
Sav. Hank v . U n i t e d S t a t e s , 3 4 5 Mass. 302, 306-30 '7
(1963). S e e a l s o S t a t e s Res rccs Corp. v . ___h c
A r c h i t e c t u r a l, ....-I.-" T e a m , I n c . , 433 F.3d 73, 80-83 ( 1 s t C i r .
200 5 ( m or tg a ge s t a t u t e s s e t minimum s t a n d a r d ) .
C h a p t e r 2 4 4 , s e c t i o n 14 s p e c i f i c s , - the
~ ~- "_
r equ remcnts f o r t h c n o t i c e t o be i s s u e d i n
c o n j u n c t i o n w i t h a fo r ec l . o su re . Sec t i - on 3.4 j . 'ncludes
t h e t e x t o f a form n o t i c e . ' T h a t fo rm s p e c i f i c a l l y
states tha t : thc "p re s en t ho lde r' ' o f t h e m o r t g a g e s h a l l
b e i d e n t i f i e d and in de ed , t h a t the p r e s e n t holder:
s h a l l s i g n t h e n o t i c e . G . L . c . 2 .44 , 5 14. T h c .
s t a t u L e s t a t e s t h a t t h i s form , w hich i s e x p l i c i t l y
p a r t o f t h e t e x t o f. S e c t io n 1 4 , " s h a l l be a s u f f i c i e n t
N o t i c e o f t h e sale." I d . ( e m p h a si s a d de d ) -
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This Court has long required that anyone
purporting to act unde r a statutory power of sale
must strictly comply with the terms ofG. L.
c . 244 , 5 14 and the power of sale:
It is familiar law that one who sells
under a power must follow strictly its
terms. If he fails to do so there isno valid execution o f the power and th6
sale is wholly void.
Moore, ' 187 Mass. at 211-212 (citations omit.ted). See
also McGreevey, 294 Mass. at 481; Roche,.106Mass. at
513; Bottomly, 1 3 ass. ~ p p . t. at 484 ("The manner
in which the not'iccof the proposed sale shall be
given i s . o n e of the important terms of the power and a
stricl: compliance with it j.s essential, to f h e valid
exercise of the power. )
Thus, even though Section 14 permits the u se of
vari.ati.ons n the statutory farm, any such variation
must include, at a minimum, the criteria specj-fied in
the statutory form, including a specific
'identificationof the present holder of the mortgage
at the t h e of the notice. Bottomly,. . I 13 Mass. A p p .
Ct. at 483-484. Tho failure to identify the present
holder of the mortgage in the notice will render a
forec.losuse voi,das matter of law. Id.
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B . P l a i n t i f f s ' f a l s e i d e n t i f i c a t i o n o f
themselves as the "present h o l d e r s " i n t h e i r
f o r e c lo s u r e n o t i c e s renders t h e n o t i c e s
fatally d e f i c i e n t .
Because t h e p l a i n t i f f s were n o t t h e p r e s en t
h o l d e r s of t h e m o r t g a g e s a t t h e t i m e t h e y f o r e c l o s e d
on t h e Ibanez and LaRacc l o a n s , t h e n o t i c e s were
f a t a l l y d e f i c i e n t and t h e f o r e c l o s u re s v o id a s a
m a t t e r o f l a w .
1 . L i s u n di sp u te d t h a t t h e f o r e c l o s u r e n o t i c e s f o r
t h e Ibanez and LaRace f o r e c l ~ o s u r e swere p u b l i s h e d in .
the names of.U.3. R a n k ' an d . W e l ls F ar go , r e s p e c t i v e l y .
[ A 4 8 4 , 4 8 6 1 . M oreover, t h e r e c o rd e s t a b l i s h e s t h a t
n e i t h e r had any i n t e r e s t i n t h e m o rt ga ge b e i n g
f o r e c l o s e d. a t t h e t i m e of t h e f o r e c l o s u r e . [A18, A231
I t i.s also u n di sp u te d t h a t n e it he r : p l a i n t i f f was. .
Lhe o r i g i n a l m o rt ga ge e o f t h e r e s p e c t i v e l o a n s . -d .
T hu s, t o b e h o l d e r s o f t h e m ortgages , t h e p l a i n t i f f s
need t o e s t a b l i s h t h a t t h e y r e c e i v e d v a l i d a ss ig n m e nt s
from a v a l i d h o l d e r of t h e mortgage: A t t h e t h e o f
t h e f o r ec l o su r e s , t h e p l a i n t i f f s had n o t r e c e i v e d any
such a s si g nm e n t ( s e e S e c t i o n I , supra.). I n d e e d , t h e
p l a i n t i f f s o n l y r e c e i v e d c om p le te d a s si g nm e n ts s e v e r a l
m o n t h s a f t e r t h e f o r e c l o s u r e s a l e s took p l a c e . a.
A cc or di ng iy , p l a i n t i f f s were n o t t h e p r e s e n t h o ld e rs
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of the mortgages and thus their foreclosure notices
were fatally deficient rendering the foreclosures void
as a matter o € law.
111. Plaintiffs’ argument that they held t h e mortgages
notwithstanding the lack of valid, written
assignments as of the date of the foreclosures is
unsupported by law.
Plaintiffs‘ contention they are the “equitable“
holders of thc mortgages and that they hold enough 0.f
the “indicia of ownership”to he considered mortgagees
of the LaRace and’Ibxiez loans is riot only
insufficient to grant them the -legal authorityto
, .
foreclose, but also insuff%cient to grant them
“present holder” status.
This argument runs counter to the’ longstanding
requirement that: foreclosure under a statutory power
of sale must be in strict compliance with all aspects
of the statute. --oore, 187 Mass. at 211-21.2;
--Bott*, 13 Mass. App. Ct. at 484. ~See also
...McGreevey,. 294 Mass. at 481; .oche, 106 Mass. at 513.
The need for strict compliance is especially true
I.n Massachusetts where no judicial approval is
required to foreclose. In the absenceo f judicial
foreclosure, strict compliance is the only means to
ensure that borrowers are not subject to fraudulentor
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i m pr op er f o r e c l o s u r e s . I n d e e d , ' a s t h e Land C o ur t
c o r r e c t l y noted, s t r i c t compliarice w i t h t h e s t a t u t o r y
r e q u i r e m e n t s f o r t h e e x e r c i s c o f a power of s a l e i s
t h e only way Lo e n su r e t h e p r o t e c t i o n s g iv en t o
homeowners an d borro we rs by t h e L e g i s l a t u r e .
D i s t r e s s e d h om eow ners o f t e n face c h a l l e n g e s i n
t .he f o r e c l o s u r e p ro c e s s. In. c ' r t a i n c a s e s , t h e y may
l a c k t.he t e c h n i c a l , k no wle dg e a nd t h e f i n a n c i a l
r e s o u r c e s t o c o n t e s t a w r o n g f u l . f o r e c l o s u r e o r
o t h e rw i s e e n su r e t h a t t h e l e n d e r a d h er e s t o t h e
o b l i g a t i o n t o s e r ve t h e i n t e r e s t s o f t h e mor tgagor i n
5good f a i t h . Thus, p l a i n t i f f s ' i m p l i c a t i o n t h a t t h e
borrowers have wai.ved Chc i r r i g h t t o c h a l l e n g e t h e
l e g i t i m a c y o f t h e s a l e b ec au se t h e y had "amp1.e
o p p o r t u n i t y t o c h a l l e n g e t h e f o r e c l o s u r e p r oc c ed i ng s
p r i o r t o t h e s a l e s b u t f a i l e d t o do so" i s
p a r t i c u l a r l y t r o u b l i n g when t h e p l a i n t i , ' f f s t he m se lv es
5 T h a t . a f o r e c 1 , o s in g p a r t y o w e s . s u c h a d u t y t o t h e
mor tgagor i s w e l l - e s t a b l i s h e d . See S e p p a l a & Aho
~.onstr. C o . v . Pe te r sen , 373 Mass. 3 1 6 , ' 320 ( 1 9 7 7 )
("We have f r e q u & t ly s t a t e d t h a t t h e b a s i c r u l e of law
a p p l i c a b l e to . t h e f o r e c l o s u r e of r e a l e s t a t e m or tg ag es
i s t h a t a mortgagee i n e x e r c i s i n g a pow er o f s a l e i n am o rt ga ge mu st a c t i n good f a i t h a n d m ust user ea so na bl e d i l i g e n c e t o p r o t e c t t h e i n t e r e s t of t h e
mor tgagor . ")
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even those who originated Loans but assigned t h e m to a
successor, mortgage l o a n s becanc the assets used in
asset-backed securities. The mortgages nominal.Sy
changed hands,many times but written assignments were
not employed. These transfers arguably have 1 1 0
practical impact until a.loan ef-sulks and foreclosure
is the creditor's preferred coursc of action. At that
point, the securitization regimewas required t n
conform to state law prior to foreclosing- to ensure
simply that legal. ownership "caught. p" in order that
the creditor foreclose legally in Massachusetts. The
lenders,. . trustees and service,rs ou1.dhave done this',
but apparently elected not to, p e r h a p s on a massive
scale.
unambiguous, a's discussed ,supra. Esp.cciallyin the
inherently legal areria oE establishing, transferring
and exercising security interests in land, Plaintiffs
should not be excused for'their a i l u r e Lo ensure that
B u t the requirements were well-known and
their business practices conformed to Massachusetts
law.
IV. There are no grounds on which to l i m i t the L an d
Court' s ,decisionto future cases.
Plaintiffs xequest that, if t h e Land C o u r t ' s
decision is upheld, this Court 1irnj.t its 'applj.cati.on
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o n l y t o f u t u r e f o r e c l o s u r e s . T h i s a rg um en t j.s w i t h o u t
a ny b a s i s i.n law and s h o u l d be r e j e c t e d .
N o t w it h st a nd i ng t h e " i n d u s t r y p r a c t i c e " of
s u bp r im e l e n d e r s a nd o t h e r s who c r e a t e d m or tg ag e-
backed s e c u r i t i e s , t h e s t a t u t o r y r eq ui re me nt s a t . i s s u e
i.n t h i s case a r c l o n g - s e t t l e d . The n o t i c e
r e q u i r e m e n t s o f G . L. c . 244, 5 1 4 have been i n p l a c e '
f u r more t h a n f i f t y y e a r s a nd we re c on f ir m e d by t h e
Appeals C o u r t i n . 1 9 0 2 . S e e B o t to m l y, 1 3 Mass. App. a t
4 8 4 . The Land C o u r t ' s r u l i r i y w a s . n o t a " j . u d i c i a l l y -
r e n d e r e d c h a n g e t o an e s t a b l i s h e d p r o p e r t y law" a s t h e
p l a i n t i f f s c la im . A p pe l l an ts ' B r . a t 49 . M O K e O V e I ,
t h e r e i s n o t , nor has Lhere ever b ee n, a d o c t r i n e ' t h a t
a n i - n t e r p r e t a t i o n of a l o ng - en a ct e d s t a t u t e c an b e
1 . i . m i t e d t o f u t u r c c a se s .
' P l a i n t i f f s claim t h a t t h e y a r e " i n n o c e n t "
p u r c h a s e r s be ca us e t h e y r e l i e d on REBA T i t l e S t a n d a r d
58 a nd c o r r es p o n d in g " i n d u s t r y p r a c t i c e " when, i n
f a c t , t h e y . w e r e a w a r e o f b a t h t h e s t a t u t 0 r . y
r eq u ir em e nt s and t h e d e f e c t s i n t h e i r own a s s i g n m e n t s
and n o n e t h e l e s s pr oc ee de d t o f o r e c l o s e . A s banks i n
t h e b u s i n es s o f m a k i n g l o a n s s e c u r e d b y m o r t g a g e s ,
s e l l i n g t h e s e s bc ur ed l o a n s , an d a t times f o r e c l o s i n g
. .
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0 1 1 t h c sc mor tgages , plaintiffs were well aware of the
statutory requirements to transfer I.egal i-nterestsin
mortgages and t o c o n d u c t f u r e c l o s u r e sales.
Plaintiffs own c o n d u c t c o n f i r m s t h i s , f o r why e l s e
would t h e y s e e k a v a l i d , w r i t t e n as si gn m en t a f t e r t h e
f o r e c l o s u r e i f no't to cure the defective assignments
in blank they possessed beforehand?
Plaintiffs were aware t h a t t h e ass ignmen. ts were
I.egal1.y e f i c i e n t and were aware u f t h e r i s k s t h e y
a c c e p t e d in loreclosing without first complying with
t h e l e g a l requirements.
auction notwithstanding these risks.
They bought 'the properties at
As the Land Court points out, t h e hanks were the
only b i d d e rs a t t h e f o r ec l o s u r e s a l e s a n d t h e y
p u r c h a s e d thesc properties for less than the market
v a l u e s stated in their own appraisals, an advantage
they may have gained b ec au se o f t h e d e f e c t s in t h e i r
n o t i c e s . [A S 19 - 8 0 ] T h i s was particularly dhmagiriy t o
Mr..Ibanez, a s U.S. Bank b i d f o r a n d p u r c h a s e d t h e
L b a n e z p r o p e r t y fo r some $ 1 6 , 0 0 0 l c s s than Lhe amount
of t h e o u t s t a n d i n g loan, leaving a significant
deficiency. Id. Thus, the p l . a i n t i f f s profited from
the risks they took, at t h e e x p e n s e o f each o f t h e
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burrowers. Having reaped th e bene fits .of their casual
attitude toward ensuring t , h e y possessed valid
assignments of the mortgages, it is n o t u n j u s t that
plaintiffs should now bear the costs of their errors.
Conclusion
For the r e a s ons s ta t -ed above, the Commonwealth
respect fully urges the Court to affirm the decision of
the Land Court.
Respectfully Submitted,
COMMONWEALTH OF MASSACHUSETTS
MARTHA COAKLEY
ATTORNEY GENERAL
Assistarit Attorney Ge n c r a l
Public Protecti.on and Advocacy .Bureau
Consumer Pro tectio n DivisionOnc Ashburton Place
B o s t o n , MA 02108
(617.) 727-2200 e x t . 2959j o h n . [email protected]. us
Dated:
September 20, 201.0
at Boston,. Massachusetts