1st Cir. Rejects Borrowers' Attempt to Void Loan Using Massachusetts's 'Obsolete Mortgage' Statute

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1st Cir. Rejects Borrowers’ Attempt to Void Loan Using Massachusetts’s ‘Obsolete Mortgage’ Statute

1st Cir. Rejects Borrowers’ Attempt to Void Loan Using Massachusetts’s ‘Obsolete Mortgage’ Statute

Lexology-

The U.S. Court of Appeals for the First Circuit recently affirmed the dismissal of a lawsuit by borrowers seeking to enjoin a mortgage foreclosure sale, holding that (a) the original lender’s nominee, MERS, could validly assign the mortgage without holding beneficial title to the underlying property and that borrowers do not have standing to challenge a mortgage assignment based on an alleged violation of a trust’s pooling and servicing agreement; and (b) the mortgage was not void under Massachusetts’s “obsolete mortgage” statute, under which a mortgage becomes obsolete and is automatically discharged five years after the expiration of the stated term or maturity date of the mortgage, as acceleration of the note did not trigger the subject limitations period.

A copy of the opinion is available at:  Link to Opinion.

A husband and wife took out an $800,000 purchase money loan secured by a mortgage on their home in 2007. The mortgage identified Mortgage Electronic Registration Systems, Inc. (MERS) as the mortgagee, acting solely as nominee for the lender and the lender’s successors and assigns. The mortgage also gave MERS power of sale over the property in the event of default.

MERS assigned the loan in 2008 to a new mortgagee. The borrowers defaulted on the loan in 2008. In 2010, the mortgagee “reassigned the mortgage to itself as trustee for [another trust].”

[LEXOLOGY]

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