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The Big Lie: MERS Mortgages in Massachusetts by Jamie Ranney, Esq.

The Big Lie: MERS Mortgages in Massachusetts by Jamie Ranney, Esq.


This is a repost from a previous post dated 11/30/2010

by Jamie Ranney, Esq.
Jamie Ranney, PC
4 Thirty Acres Lane
Nantucket, MA 02554
jamie@nantucketlaw.pro
508-228-9224

This memo will focus on MERS-designated mortgages in Massachusetts.

In this author’s opinion two (2) things are evident after a survey of Massachusetts law.

First, MERS cannot be a valid “mortgagee” under Massachusetts law and thus MERS designated mortgages are invalid in the Commonwealth of Massachusetts.

This is because MERS-designated mortgages by definition “split” the security instrument (the mortgage) from the debt (the promissory note) when they are signed. This “split” invalidates the mortgage under Massachusetts law. Where the security interest is invalid upon the signing of the mortgage, MERS cannot occupy the legal position of a “mortgagee” under Massachusetts law no matter what language MERS inserts into their mortgages that purports to give them the legal position of “mortgagee”. Since MERS-designated mortgages are invalid at their inception, it follows logically therefore that MERS mortgages are not legally capable of being recorded in the Commonwealth of Massachusetts by its Registers of Deeds.

Second, even if a MERS-designated mortgage were found to be a valid security instrument in Massachusetts, each and every assignment of the mortgage and note “behind” a MERS-designated mortgage must be recorded on the public land records of the Commonwealth in order to comply with the Massachusetts recording statute at M.G.L. c. 183, s. 4 which requires that “conveyances of an estate” be recorded to be valid. A mortgage is a “conveyance of an estate” under Massachusetts law. Since MERS-designated mortgages exist for the primary purpose of holding “legal” title on the public land records while the “beneficial” interest is transferred and sold multiple times (and a mortgage cannot exist without a note under Massachusetts law), MERS-mortgages unlawfully avoid recording fees due the Commonwealth for the transfer(s) of interests under MERS-designated mortgages.

“If you tell a lie that’s big enough, and you tell it often enough, people will believe you are telling the truth, even when what you are saying is total crap.”1

Continue reading below…

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Massachusetts Home Seizures Threatened in Loan Case: Mortgages

Massachusetts Home Seizures Threatened in Loan Case: Mortgages


“If you’re going to take someone’s home away, you’ve got to prove you have the right to do it, and you have to follow the law when you do it,” Atty Glenn Russell said.

Busines Week-

The highest court in Massachusetts is poised to rule as soon as this month on a foreclosure case that could lead to a surge in claims from home owners seeking to overturn seizures.

The justices are deciding whether to uphold a lower court ruling that gave a Boston home back to Henrietta Eaton after Sam Levine, a 25-year-old Harvard Law School student, argued in front of the nation’s oldest appellate court that the loan servicer made mistakes when it foreclosed because it didn’t hold the note proving she was obliged to pay the mortgage.

“If the Massachusetts court says this defense works, that would have a huge ripple effect across the country,” said Kurt Eggert, a professor at Chapman University School of Law in Orange, California.

[BUSINESS WEEK]

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MA SJC Agrees To Hear Crucial Foreclosure Standing Case In HSBC Bank v. Matt

MA SJC Agrees To Hear Crucial Foreclosure Standing Case In HSBC Bank v. Matt


Thank You Attorney Glenn Russell for doggedly pursuing these Gangster Banksters…

Via: Rich Vetstein

Court May Decide Lenders’ Standing In All Foreclosure Cases Involving Securitized Mortgages

With all the hoopla yesterday surrounding Attorney General Martha Coakley’s monumental lawsuit against the big banks over foreclosure practices, the Supreme Judicial Court on November 29, 2011 quietly agreed to hear an appeal over whether a lender holding a securitized mortgage has standing to even begin a foreclosure action in the Land Court under the Servicemembers Civil Relief Act–one of the first steps in the Massachusetts foreclosure process.

COMMONWEALTH OF MASSACHUSETTS
THE TRIAL COURT
LAND COURT DEPARTMENT

HSBC BANK USA, N.A., as trustee of Ace
Securities Corp., Home Equity Loan Trust, Series
2005-HE4,
Plaintiff,

v.

JODI MATT,
Defendant

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AG Coakley Issues Statement on the SJC Decision in Bevilacqua v. Rodriguez – “This case is just one example of a much larger problem”

AG Coakley Issues Statement on the SJC Decision in Bevilacqua v. Rodriguez – “This case is just one example of a much larger problem”


Contact:

Melissa Karpinsky
Amie Breton
(617) 727-2543

MARTHA COAKLEY
ATTORNEY GENERAL

October 18, 2011 – For immediate release:
.
.
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AG Coakley Issues Statement on the SJC Decision in Bevilacqua v. Rodriguez

 

BOSTON – A decision by the Massachusetts Supreme Judicial Court (SJC) today in Bevilacqua v. Rodriguez, reaffirmed that a mortgage holder must have both “jurisdiction and authority” –a valid assignment of mortgage – in order to foreclose on a property.Attorney General Martha Coakley issued the following statement:

“This case is just one example of a much larger problem. In the rush to foreclose, the banks’ reckless origination and foreclosure practices have created a domino effect that has harmed Massachusetts homeowners as well as third-party purchasers who purchased properties after foreclosure. 

This is yet another clear demonstration that the only way we are going to restore a healthy economy is to address the foreclosure crisis and hold the banks accountable for their actions.”

BACKGROUND:

This case determined that because U.S. Bank did not hold a valid assignment of the mortgage at the time it initiated foreclosure proceedings, it failed to acquire title.  As a result, not only did U.S. Bank foreclose without legal authority to do so, but its failure means that it was unable to transfer clear title to Mr. Bevilacqua.

As the SJC recently observed in U.S. Bank, N.A. v. Ibanez, many investors in the secondary mortgage market ignored longstanding requirements of Massachusetts law concerning when and how a mortgage holder may exercise its right to foreclose, resulting in numerous invalid foreclosures.

Mr. Bevilacqua was a third-party purchaser of property that was foreclosed upon by U.S. Bank prior to the Land Court’s initial decision in Ibanez.  Mr. Rodriguez is the prior mortgagor.  Because U.S. Bank did not hold a valid assignment prior to commencing foreclosure proceedings the foreclosure was deemed invalid. U.S. Bank foreclosed without legal authority and was unable to transfer clean title to Mr. Bevilacqua.  

Bevilacqua brought an action under the so-called “try title” statute because the Ibanez decision had clouded Bevilaqua’s claim to the property.  It allows the holder of a clouded title to initiate an action to clear title without waiting for adverse claimants to sue first.  The try title process provides that if adequate notice is issued and an adverse claimant fails to respond then the petitioner may obtain an order barring that claimant from ever challenging the petitioner’s right to title. 

The Land Court denied Bevilacqua’s petition, ruling that one seeking to use the try title process must have at least a plausible claim to the title.  The Court ruled that Bevilacqua has no such claim to title where he acquired a deed following an invalid foreclosure.  The Land Court held that Bevilacqua acquired whatever it was that U.S. Bank had to sell as of the foreclosure.  Because, per Ibanez, at the time of the foreclosure, the bank held nothing, Bevilacqua acquired nothing and had no standing as a result. 

Today, the SJC affirmed the Land Court decision and reaffirmed the essential holdings of Ibanez: that the mortgage holder must have a valid assignment of mortgage in order to foreclose on a property. The Court also held that one cannot use the try title process to extinguish the right of redemption – a mortgagee can only foreclose by strict adherence to the statutory processes for foreclosure by exercising the power of sale or foreclosure by entry.

The Attorney General’s Office filed an amicus brief in this case in April 2011 and presented oral arguments before the SJC on May 2, 2011.

 

 

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Guest Post: Houston, we’ve got a problem – Bevilacqua

Guest Post: Houston, we’ve got a problem – Bevilacqua


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On Oct. 18th, 2011 the Massachusetts Supreme Judicial Court handed down their decision in the FRANCIS J. BEVILACQUA, THIRD vs. PABLO RODRIGUEZ – and in a moment, essentially made foreclosure sales in the commonwealth over the last five years wholly void. However, some of the more polite headlines, undoubtedly in the interest of not causing wide spread panic simply put it “SJC puts foreclosure sales in doubt” or “Buyer Can’t Sue After Bad Foreclosure Sale

In essence, the ruling upheld that those who had purchased foreclosure properties that had been illegally foreclosed upon (which is virtually all foreclosure sales in the last five years), did not in fact have title to those properties.

Given the fact that more than two-thirds of all real estate transactions in the last five years have also been foreclosed properties, this creates a small problem.

The Massachusetts SJC is one of the most respected high courts in the country, other supreme courts look to these decisions for guidance, and would find it difficult to rule any other way in their own states. It is a precedent. It’s an important precedent.

Here are the key components of the Bevilacqua case:

1. In holding that Bevilacqua could not make “something from nothing” (bring an action or even have standing to bring an action, when he had a title worth nothing) the lower land court applied and upheld long-standing principles of conveyance.

2. A foreclosure conducted by a non-mortgagee (which includes basically all of them over the last five years, including the landmark Ibanez case) is wholly void and passes no title to a subsequent transferee (purchasers of foreclosures will be especially pleased to learn of this)

3. Where (as in Bevilacqua) a non-mortgagee records a post-foreclosure assignment, any subsequent transferee has record notice that the foreclosure is simply void.

4. A wholly void foreclosure deed passes no title even to a supposed “bona fide purchaser”

5. The Grantee of an invalid (wholly void) foreclosure deed does not have record title, nor does any person claiming under a wholly void deed, and the decision of the lower land court properly dismissed Bevilacqua’s petition.

6. The land court correctly reasoned that the remedy available to Bevilacqua was not against the wrongly foreclosed homeowner but rather against the wrongly foreclosing bank and/or perhaps the servicer (depending on who actually conducted the foreclosure)

When thinking about the implications of Bevilacqua – the importance of point six cannot be overstated.

The re-foreclosure suggestion is not valid

Re-foreclosing on these properties in not likely as has been suggested by bank layers in light of the Bevilacqua ruling. We aren’t talking about Donald Trump here and we have a funny feeling he won’t be affected either. Mostly it’s guys like Bevilacqua who bought single or multi units, in the “hundreds of thousands” range. It seem unlikely that the majority of these folks would have the capital to eat their existing loses, re-foreclose at great expense, and on top of all of that come out as the highest bidder on the very property they formerly thought was their own. In many cases, as was the case in Bevilacqua, the original purchaser of the foreclosure may have already resold the property and moved on, thus leaving in their wake an even more serious problem; the likelihood of a property owner, who had nothing directly to do with a foreclosure, but is left with all the fallout of a post-Bevilacqua world.

Perhaps some enterprising young American will come up with some unscripted video series called “foreclosures gone wild”, that features foreclosure buyers spontaneously revealing the anatomy of their profane foreclosure deals in front of smart phones recording in HD video – some direct marketing firm could then make it available on some late night infomercial app where it will get billions of downloads on Ipads. We think this highly original (never before seen) business idea should be promptly explored.  Surely there will be high demand coming from iPad owners in small Scandinavian countries where connoisseurs of vintage 2000-2006 MBS products reside in high concentrations.

All fun aside, re-bidding on these properties in a post-re-foreclosure scenario would be done in what is soon to be a new inflationary environment (most originally bid in a deflationary environment for housing), thus making the “re-foreclosure” blank threat all the more unconvincing and unlikely.

However, it should be easy enough for investors similarly situated to Bevilacqua to simply hire fee contingent attorneys who can promptly sue the banks and servicers for conveying fraudulent deeds – that seems like a much easier and logical proposition. When the potentially millions of lawsuits are added to the complaints filed by investors in MBS, we think the banks will finally be revealed as wholly insolvent. The only other way it could happen faster, is if the average American home owner, realizing he may never obtain clear title to his home (short of an indemnity from his bank), finally stops making his monthly payments on his invalid note (which completely lacks a valid security instrument). In this way, the existing insolvency of banks would be recognized in a matter of days rather than months or years.

The act of denial does not actually alter reality

Ostriches are said to have discovered this the hard way. On November 12th, 2010 in our article “Tattoos, Pyramid Schemes and Social Justice” we advocated that home owners, with securitized mortgages, regardless of their ability to pay, consider suspending their mortgage payments, and place those funds into a private escrow account instead. We wrote:

“Radical though it may seem, we believe the only way to stop the chaos of fraud and the breakdown of the rule of law in our courts, and most importantly to ensure that we ourselves are not participants in the fraud, is for homeowners who can afford their mortgage to stop paying it…”

The article goes on to say:

“For example, what is easier; to scorn those who are being foreclosed on because they can no longer afford their mortgage or to accept the possibility that our entire financial, and maybe justice system might be badly corrupted? Across all spectrums of crime, victims are often blamed, just ask attorneys who represent rape victims. This phenomenon is by no means unique to mortgage fraud, or those who have been raped by the institutions who carry out this trade. It has been made to appear as if those who have fallen on hard times are a matter of “incidental” inequalities in an otherwise procedurally just system. However, it is precisely the opposite which is true. Our financial institutions have created deliberate inequalities, through the use of procedurally unjust systems.”

We pointed out that suspending such payment might be done for the following reasons, which in light of the recent Bevilacqua decision, and the pending Eaton Decision, are increasingly being proven correct:

“1. They are not sure where or if their payments are going to the true note holder.

2. They no longer know who the true note holder is.

3. They have a legitimate concern that they may not be able to ever obtain clear title and/or title insurance (in the event of a sale) given what we now know about improperly conveyed titles and the illegitimacy of “MERS”.

4. They do not want to be an unwitting or passive participant in fraud.

5. They care about America, want our culture to be healed and recognize the dignity of every human being.”

Long before the Ibanez decision was handed down we wrote the following (taken from the same article):

“If these legitimate reasons are the cause to suspend mortgage payments, then what attack on these “non-co-operators” character can be levelled? In these cases, Judge’s will have to allow for proper civil procedure to take place in order for the legitimate inquiries of concerned Americans to come to light. Since banks virtually never produce adequate documentation (which appears to be by design), chances are things will escalate.”

We went on to discuss the unique risks of apathy and denial in the following:

“…Americans have a duty to ask critical questions about the operations of their financial institutions, and if evidence has been presented that a deal was made, but not everyone was playing by the rules, than those deals need to be looked at again. It is not good enough any longer to say, if it doesn’t affect “me” than, I’m not getting involved. We have a duty to one another as Americans, and more importantly as human beings, to care about truth and justice. What’s more, apathy, so long as we are not affected, is a short lived consolation. Ultimately, this crisis will affect everyone sooner or later.”

Certainly when the SJC handed down their opinion affirming Bevilacqua, perhaps hundreds of thousands, and ultimately millions of people who previously thought they were not affected, were suddenly well, affected. That is because there has been about six million foreclosures since the current economic crisis began, and those foreclosures may have resulted in many more interested parties, as was the case in Bevilacqua, who sold the subject property to four new owners, thus multiplying the number of parties involved, and ultimately the number of legal actions which could be brought. It is not hard to see where six million voided foreclosures might well result in new lawsuits in excess of that number – and if the courts advice is taken, these complaints would be directed, and properly so, at banks and servicers.

We expanded greatly on the themes of fraud, denial, and the likely economic consequences in our articles “Ibanez – Denying the Antecedent, Suppressing the Evidence and one big fat Red Herring” and “Eaton – Dividing the Mortgage Loan and Affirming the Consequent” which covered the other two recent landmark SJC cases – these may be worth reading in tandem with the present article in order to understand the full breadth of the problem.

In the Ibanez article, which was written in January of this year we wrote the following:

“If you live in Massachusetts and your mortgage has been securitized, or if you have purchased a foreclosure property, we think it would be wise to consider suspending your mortgage payments if you haven’t already.”

We believe these particular words have become incredibly relevant given the implications of Bevilacqua.

Finally, In our article “On the ethics of mortgage loan default” we tried to cover any outstanding inhibitions homeowners might have about the advice we were giving.

A few phone calls opens a whole new world

We decided to call a few title insurance companies to get their “take” on it all. We made the mistake of identifying ourselves as “bloggers” in the first phone call – that call may well have set a new land speed record for the fastest time from answering to hanging up. Thinking there might be a smarter approach, we decided to identify ourselves as homeowners (equally true) on the next call – the results were a little better, but only slightly.

The underwriters and title examiners we spoke to kept asking if we were attorneys, or if we represented the home owner as “council”. We thought this was curious because we kept pointing out that we were ourselves just homeowners. Then it hit us, they have never actually spoken to a real, live, breathing customer on the policy origination side, they had only ever spoken to lawyer-brokers. We thought; what an interesting confluence of incentives this must create, and why is the buyer of the policy necessarily so far removed from the seller?

the_money_trailFollow the money trail – that’s what they say. Looking for answers, follow the money trail. What is the one piece of the equation upon which all else hinges? It’s not the lawyers, it’s not the judiciary, the answer lies in the investment banks – but they must first pass through the gatekeepers of real estate; title insurance companies. To understand the problem does require some understand of law, but really mostly it’s an understanding of finance and of business that is required above all else. Money in this case, cannot pass from bank depositor, to banker, to bank borrower in real estate transactions without the all-important “title insurance policy”.

So maybe there will be a happy ending after all, for once upon a time didn’t the likes of AIG insure a whole lot of CDS’s for Goldman Sachs who was then paid 100 cents on the dollar (in a 43 cents on the dollar world)? That worked out well – just think of the benefits of insurance – AIG is still around, Goldman’s stock price went on to quadruple in the following 18 months. The cost was relatively low, and mostly out of sight – voluntary shareholders in AIG were emancipated from their money-investment in AIG stock, and were swiftly replaced with involuntary shareholders – also known as; tax payers. It’s the bankrupt companies definition of “preferred” shareholder – although it veers slightly from the traditional one.

bridge_jumpingSo does it matter what lawyers, bankers, bloggers and judges think? This is America and America is all about business, and in this case, business cannot be transacted without title insurance companies, and the good thing about insurances companies is they have actuaries, and actuaries calculate risk, this is especially important since the banking community has proven that they either cannot calculate risk or are not interested in doing so. Actuaries are not exciting people, they are number crunchers, they don’t do bridge jumping and they would never take inordinate risk, right?

The insurance business is interesting, even if their actuaries aren’t’. That’s because it’s really not about making money off writing policies, anyone who knows the insurance business (or has read a 10Q, an annual report or listened to a conference call of one) knows that insurance companies make their money from investing the “float“, that is to say the funds held in trust between the time policy revenue is paid in, and the time claims are paid out. It’s a good business, in fact it is so good – almost everyone wants in. this business has become so robust that it even supports its own cottage industry in off-shore jurisdictions where the return on the “float” can even go untaxed – or did you think those insurance executives jets just happened to have Bermuda, The British Virgin Islands, and the Caymans stuck in their GPS just because those places have nice beaches? Although we concede they also have very nice beaches.

Needless to say it’s an even better business, when you almost never have to pay out on a policy. Title insurance is unique in that way. Even the SJC conceded in Bevilacqua that this sort of “Try Title” action had not been presented before the SJC in over a hundred years. In fact, business is so good, that there is really no entry on the Profit and Loss statement of these firms for marketing expense – when was the last time you saw a TV ad, or an AD on the Internet for a title insurance company which had a better product at a better price? There is no Geico Gecko for the title insurance business.  For that matter, don’t hold your breath on finding a deal on title insurance through Groupon either.

This piqued our interest. We were so drawn to the prospect that the answers to a multi-trillion dollar question may lie in this little known, little observed, obscure industry that we decided to pick up the phone and call a few title examiners, underwriters and brokers. What we learned was nothing short of fascinating. First they all clammed up and didn’t want to talk SJC cases. Second, they affirmed, after a bit of cajoling, that they will write a policy if any servicer gives them a “pay off” letter – we’re talking a one page letter from one perfect stranger to another – insuring ownership in hundreds of thousands if not millions of dollars in real property (per transaction), and of course trillions at the nation level. This one pager could then be recorded at any local registry with precisely zero oversight.

In a world where you can’t take hair conditioner on to a flight (even in all your barefoot glory), it turns out anybody can record title to a property worth large sums with absolutely no oversight or security checks. Frankly, we’re beginning to feel like we’ve been in the wrong business all these years.

the_matrix_3When pressed on the Eaton case, and the fact, that servicers cannot actually discharge anything (as Green Tree Servicing, LLC admitted in the uber-important Eaton case), certainly not the debt, most hung up the phone quickly – although we were exceedingly polite, professional and even gentle in our approach. These conversations, where something like being in the twilight zone. Just when we thought we had contemplated the last layer of the onion, we couldn’t believe it, with just a few phone calls, the matrix of lies came streaming down before our face yet again, like vertical lines of green computer code – apparently the underwrites took the wrong pill.

How hard would it be for the title examiners and underwriters to simply go deeper than one page, or contemplate the importance of the decisions coming out of the land court and the SJC?

The failure to perform risk assessment in the insurance underwriting business really means a lapse in fiduciary responsibility. The Absence of fiduciary responsibility means the possibility of shareholder class action lawsuits.

Conflict of Interest? You think?

So if the insurance business isn’t about making money on writing policies (predicated on sound actuarial work), and if an insurance company can even lose money on underwriting as many often do, and still make a profit by investing “the float”, then there may be an incentive to write policies, that reflect less than prudent risk management – that is to say losses on the underwriting side of the business would be made up on the investment side. As long as this is successful, shares in these companies can be sold to investors. The best investors are large funds like mutual funds because they buy in large junks of shares, are run by investment managers who are generally not very shrewd, and they hold long enough for insiders to sell. Large mutual funds are also the ideal investors because they have a steady stream of cash from IRA’s and 401k’s. IRA’s and 401k’s are steady sources of cash to mutual funds because most of those folks who were wise enough to envision saving, were also determined to buy and own a home (rather than rent one), thinking (perhaps wrongly), that it represented a sound investment. In this way, the loop from policy purchaser, to indirect title insurance company shareholder is complete. It’s almost like a double tax on the unsuspecting home purchaser, which is subtle and goes almost entirely undetected. That’s is why most homeowners have no clue who their title insurance company is, but can tell you in half a second who insures their car, their health care, or their home.

So what sort of investments are the investment managers at insurance companies making? Well, we know the insurance culture isn’t fond of extreme sports, and as it turns out their not very enterprising when it comes to their investments either – let’s just say their passive, they like fixed income, you know, a few muni’s, maybe some treasuries, but above all, they like commercial bonds for their fixed income (and perceived safety), especially those which are derived from Residential Mortgage Backed Securities, or RMBS’s. The feeders of these funds – the mortgage origination and securitization industry, is none other than their very own customers – think of it as one big happy love triangle, or if you happen to live in Utah and prefer their par lance “plural marriage”. The title insurance companies, the mortgage origination and securitization industry and policy purchasers are like sister wives. Of course the husbands in these relationships of Asymmetrical Power, are the alchemists of the modern era, they are the engineers of derivatives, and they hide behind curtains in tall shiny buildings in an emerald city called wall street, turning their Copper into Gold.  For more on this activity, it might be worth reading the article “Three Card Monte and other efficient ways of parting with your money

Historically, title insurance companies almost never pay out. When was the last time you heard of a title insurance policy actually being used? Over the decades, it was nothing more than a simple entry on the closing HUD statement when real estate was bought or sold. Homeowners didn’t’ “shop” the policy, and they had no idea that when it showed up on their closing statement, that their lawyer was also a broker for the title insurance company, collecting some 70% of the premium – if they knew that, than they would know that their attorney might also have a conflict of interest when he oversaw / received the title exam, and the selection of the policy. Finding a defect or cloud on title in this circumstance meant no policy and therefore no commission – so the closing attorney’s themselves were incentivized not to scrutinize too much – and why was this agency relationship never revealed? Isn’t that in direct opposition to consumer protection laws?

So why were those underwriters so quick to get off the phone, as soon as we “dug a little deeper” into their criteria? Well, it’s because their options don’t look too good – in fact there are only two:

a) Acknowledge that the titles to 60 mln. plus homes are badly clouded and not insurable. In which case the entire operation of writing policies, taking in premiums, investing the float in MBS’s, so that mutual funds can take in funds from various and sundry retirement accounts of home owners and buy your stock suddenly stops.

b) Pretend like your not aware of the problem and deny or use the more complex version “deny, deny, deny”.  In this operation, business can continue, at least for a while – although when the final reckoning comes, the problems will be many orders of magnitude larger.

We believe plan “B” has been the modus operandi of the industry for sometime now. However, like all parties, and indeed everything which has a beginning, this too must come to an end.

Title insurance underwriters and drug addicts; just likes peas in a pod

enabler2Why is the role of insurance companies in all of this not more closely examined? If it was an addiction we were speaking of (and maybe it is), we could think of the insurers as the “enablers”, and as any good interventionist, support group, or sponsor will tell you, the enabler is as much of an addict as the addict themselves.

But what is the addiction? In a way it’s money, but in another way it’s something more than that. It’s really power. Money of course, is power, because at the end of the day, its really a redemption slip on society, and when you possess many of these tiny slips of paper, you effectively have much you can ask of the society around you – and that is power. The Alchemist-Engineers know this, so the jig in title insurance is really no different than the funny business that took place during the “Golden Age” of loan origination – they both follow what we might call the “the Mozilo principle”.

How could we look at the addicts without looking at the enablers? Where are the insurance regulators? We marveled at the discovery that there may well exist an entire insurance industry that is predicated upon the complete lack of any sort of actuary role in it’s calculation of risk, or oversight in it’s conduct of business, an entire sub-species of the insurance animal where policy payouts are unheard of. In such an industry it’s easy to imagine that there would be total lethargy, apathy, and greed and accordingly there is.

Further to this point, it’s important to note that Bevilacqua did not just turn up yesterday, he turned up five years ago – his case was never really a true legal question, it was always a business question.  It seems more business is conducted inside a court room than in marketplaces nowadays – we wonder what the chinese must be thinking of the efficiency of this model.

It could all come tumbling down suddenly

The banks settlement negotiations with the 50 states AG has focused on refinancing as a solution; why? Because refinancing ratifies, and puts good paper over bad fraudulent paper. As pointed out in “On the ethics of mortgage loan default” – that’s a bad deal for homeowners. Taking an asset with bad pricing, and which had a commensurate and corrupt security interest, and improving and perfecting the security through “refinancing”, but leaving the bad pricing in place (which is a direct derivative of fraud) is not a good deal for the homeowner. For a modest decrease in the monthly mortgage payment, the homeowner pays the price of somebody else’s fraud (although he may not know it).

Further it may be a mistake to speak of buyers of these foreclosure properties as “innocent third parties” as the banks suddenly (at least since Bevilacqua emerged) are fond of doing. Is this characterization really accurate? We know that about two-thirds of real estate transactions over the years have been foreclosure properties; we also know that a good deal of those transactions were cash deals. Does that sound like “the Joneses” to you?

The buyer of a foreclosure is somewhat more enterprising than his average home buying family man cousin who buys a home because he happens to like it. The buyer of a foreclosure is by definition more of an investor than someone merely looking for shelter. This is especially true in the case at hand – Bevilacqua – who was a developer, and who turned the subject property into four separate units with four separate buyers – probably at a profit to himself, but at great harm to the buyers. In this way, the banks fraud is magnified, through the buyers of foreclosures who are more often than not, enterprising, investment minded persons, with the ability to move at greater speed than the average homesteader.

Of course nearly all home buyers are functioning in some way as investors, in so far as the overwhelming majority are purchasing the largest investment of their life. So the buyer must do proper due diligence, regardless of their place on the investor spectrum. Where there is a failure to do even basic due diligence, there is at least some accountability. However, it is not as great as the accountability of the title insurers, or the bank-sellers, who maintain superior knowledge about the “back-room dealings” of these transactions.

We only point this out so that prospective buyers of foreclosures (and also all homeowners) will pause for a moment and consider the possibilities that Bevilacqua gives rise to. The buyers of foreclosures at least are not entirely innocent as has been suggested by an industry which seeks to persuade a panel of judges and deflect away from itself the possibility of legal reprisals. Why else would the American Land title Association, and the Mortgage Bankers Associations along with their TBL’s (Tall Building Lawyers), spend the time, energy and resources to file lengthy Amici Curiae briefs in Bevilacqua? It was a like a free legal defense for a small-potatoes property developer that no one had ever heard of.

It’s worth contemplating before making out that next mortgage payment. Maybe “home ownership” in the very near future simply means staying right where your at – or in the spirit of the protesters which has gripped our world – “occupying” the house your already in.

Can a valid policy be written on securitized mortgage loans in light of Bevilacqua? Without the enablers, no transactions would or could ever get done. Without policies getting written, no real estate would be transacted, and yet another Pyramid would come tumbling down.
.

About Gregory M. Lemelson

Author – Amvona.com blog. Entrepreneur. Find joy in teaching and writing. Founded companies in retail, real estate and Internet technology.

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Mass. SJC: Buyer Can’t Sue After Bad Foreclosure Sale “MERS’ ASSIGNMENT” – In Re: Bevilacqua v. Rodriguez

Mass. SJC: Buyer Can’t Sue After Bad Foreclosure Sale “MERS’ ASSIGNMENT” – In Re: Bevilacqua v. Rodriguez


This goes to show not only does MERS assign after the Complaint/ Lis Pendens is filed, but also after the sale. BS!

The mortgage was assigned to it after the foreclosure sale by Merscorp Inc.’s Mortgage Electronic Registration Systems, a national database of mortgages.

 

Bloomberg-

A Massachusetts man who bought property in a faulty foreclosure sale didn’t have the right to bring a court case over the property because he isn’t the owner, the state’s high court ruled.

The Supreme Judicial Court, which in January found that banks can’t foreclose on a house if they don’t own the mortgage, went one step further in a closely watched case and said a sale after that foreclosure doesn’t transfer the property. Therefore, the buyer couldn’t bring his court action against a previous owner, the court ruled.

The high court upheld a lower-court decision that said Francis J. Bevilacqua III, the buyer of residential property in Haverhill, Massachusetts, never owned it because U.S. Bancorp foreclosed before it got the mortgage. Today’s ruling could have implications in the foreclosure crisis in which banks are accused of clouding home titles through sloppy transferring of mortgages.

[BLOOMBERG]

Scribd

NOTICE: The slip opinions and orders posted on this Web site are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports. This preliminary material will be removed from the Web site once the advance sheets of the Official Reports are published. If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA 02108-1750; (617) 557-1030; SJCReporter@sjc.state.ma.us

Francis J. BEVILACQUA, Third vs. Pablo RODRIGUEZ.
 

SJC-10880.
 

May 2, 2011. – October 18, 2011.

Jurisdiction, Land Court. Land Court, Jurisdiction. Practice, Civil, Parties, Standing, Dismissal. Real Property, Ownership, Record title, Mortgage, Bona fide purchaser. Mortgage, Real estate, Foreclosure, Assignment, Equity of redemption.

CIVIL ACTION commenced in the Land Court Department on April 12, 2010.

The case was heard by Keith C. Long, J.

The Supreme Judicial Court granted an application for direct appellate review.

Jeffrey B. Loeb (David Glod with him) for the plaintiff.

Richard A. Oetheimer (Natalie F. Langlois with him) for Mortgage Bankers Association.

Max Weinstein for WilmerHale Legal Services Center of Harvard Law School.

John M. Stephan & Amber Anderson Villa, Assistant Attorneys General, for the Commonwealth.

The following submitted briefs for amici curiae:

Mark B. Johnson for American Land Title Association.

Adam J. Levitin, of the District of Columbia, Christopher L. Peterson, of Utah, John A.E. Pottow, of Michigan, & Katherine Porter, pro se.

Edward Rainen, Carrie B. Rainen, & Ward P. Graham for Massachusetts Association of Bank Counsel, Inc.

Present: Ireland, C.J., Spina, Cordy, Botsford, Gants, & Duffly, JJ.

SPINA, J.

In this case we must determine whether a plaintiff has standing to maintain a try title action under G.L. c. 240, §§ 1-5, where he is in physical possession of real property but his chain of title rests on a foreclosure sale conducted by someone other than “the mortgagee or his executors, administrators, successors or assigns.” G.L. c. 183, § 21 (statutory power of sale). See G.L. c. 244, § 14 (procedure for foreclosure under power of sale). On his own motion, a Land Court judge determined that the plaintiff, Francis J. Bevilacqua, III, “holds no title to the property at 126-128 Summer Street in Haverhill,” and thus lacks standing to bring a try title action. The judge dismissed the complaint with prejudice and Bevilacqua appealed. We granted Bevilacqua’s application for direct appellate review and now affirm the dismissal of his complaint but conclude that such dismissal should have been entered without prejudice. [FN1]

1. Procedural background. This case comes before us on a highly unusual procedural footing. The respondent, Pablo Rodriguez, has not been located and accordingly has not entered an appearance. As a result, it fell to the Land Court judge to raise the issue of Bevilacqua’s standing under G.L. c. 240, § 1. See Mass. R. Civ. P. 12(h)(3), 365 Mass. 754 (1974) (“Whenever it appears by suggestion of a party or otherwise that the court lacks jurisdiction of the subject matter, the court shall dismiss the action”); Maxwell v. AIG Domestic Claims, Inc., ante 91, 99-100 (2011); Sullivan v. Chief Justice for Admin. & Mgt. of the Trial Court, 448 Mass. 15, 21 (2006); Litton Business Sys., Inc. v. Commissioner of Revenue, 383 Mass. 619, 622 (1981). The procedures applicable to such a sua sponte motion in a try title action are unclear and the judge did not specify the rule under which the dismissal was ordered. We have received no briefing on the issue from Bevilacqua, and those amici addressing the point note that the absence of precedent leads them to “presume[ ]” the applicable standard.

In considering the appropriate procedure, we note that a court’s sua sponte motion to dismiss for lack of subject matter jurisdiction is analogous to a party’s motion to dismiss under either Mass. R. Civ. P. 12(b)(1) or (6), 365 Mass. 754 (1974). Ordinarily, “[i]n reviewing a dismissal under rule 12(b)(1) or (6), we accept the factual allegations in the plaintiffs’ complaint, as well as any favorable inferences reasonably drawn from them, as true.” Ginther v. Commissioner of Ins., 427 Mass. 319, 322 (1998). Cf. Iannacchino v. Ford Motor Co., 451 Mass. 623, 636 (2008), quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007) (clarifying standards for dismissal under rule 12[b] [6] ). The unusual mechanics of G.L. c. 240, §§ 1-5, however, suggest that the analogy may not be perfect and that a different standard may be appropriate.

[FN2] We need not resolve the issue today, however, because we conclude that Bevilacqua’s complaint must be dismissed even if we apply the most favorable of the possible standards of review. See Ginther v. Commissioner of Ins., supra (standards for motion to dismiss for lack of subject matter jurisdiction). We thus “accept the factual allegations in [Bevilacqua's petition], as well as any favorable inferences reasonably drawn from them, as true.” Id. Those facts are as follows.

On March 18, 2005, Pablo Rodriguez granted a mortgage on the property to Mortgage Electronic Registration Systems, Inc. (MERS), as nominee for Finance America, LLC. The mortgage was recorded at the Southern Essex registry of deeds (registry). As of June 29, 2006, MERS had not assigned the mortgage to U.S. Bank National Association (U.S.Bank) but, on that date, U.S. Bank executed a foreclosure deed referencing the mortgage and purporting to transfer the property pursuant to a foreclosure sale from U.S. Bank (as trustee under a trust that is not further described) to U.S. Bank “as Trustee under the securitization Servicing Agreement dated as of July 1, 2005 Structured Asset Securities Corporation Structure Asset Investment Loan Trust Mortgage Pass Through Certificates, Series 2005-HEI.” Nearly one month later, on July 21, 2006, MERS assigned the mortgage to U.S. Bank in an assignment of mortgage recorded at the registry. A “confirmatory foreclosure deed” was then granted on October 9, 2006, by U.S. Bank to U.S. Bank as trustee under the servicing agreement. Eight days later, on October 17, 2006, U.S. Bank “as Trustee” granted a quitclaim deed to Bevilacqua.

On April 12, 2010, Bevilacqua filed a petition to compel Rodriguez to try title to the property. In his complaint Bevilacqua claimed to reside at the property and to hold record title. Because of the fact that MERS had not assigned the mortgage to U.S. Bank at the time of the foreclosure, Bevilacqua alleged that there is a cloud on his title in the form of “the possibility of an adverse claim by Rodriguez against Bevilacqua’s title to the [p]roperty.”

2. Statutory background. Bevilacqua seeks an order that either compels Rodriguez to bring an action to try his title or forever bars him from enforcing his adverse claims to the property. Try title actions under G.L. c. 240, §§ 1-5, are within the exclusive original jurisdiction of the Land Court. G.L. c. 185, § 1 (d ). If Bevilacqua cannot satisfy the jurisdictional requirements of the statute, then the Land Court is without subject matter jurisdiction and the petition must be dismissed. See Boston Edison Co. v. Boston Redevelopment Auth., 374 Mass. 37, 46 (1977); Riverbank Improvement Co. v. Chapman, 224 Mass. 424, 425 (1916) (“The Land Court is a statutory court, not of general but of strictly limited jurisdiction”).

The statute states, in relevant part:

“If the record title of land is clouded by an adverse claim, or by the possibility thereof, a person in possession of such land claiming an estate of freehold therein … may file a petition in the land court stating his interest, describing the land, the claims and the possible adverse claimants so far as known to him, and praying that such claimants may be summoned to show cause why they should not bring an action to try such claim.”

G.L. c. 240, § 1. There are thus two steps to a try title action: the first, which requires the plaintiff to establish jurisdictional facts such that the adverse claimant might be “summoned to show cause why [he] should not bring an action to try [his] claim,” and the second, which requires the adverse claimant either to disclaim the relevant interest in the property or to bring an action to assert the claim in question. [FN3] Id. See Blanchard v. Lowell, 177 Mass. 501, 504-505 (1901). The establishment of jurisdictional facts, although essential in all cases, is thus a matter of particular salience in the initial stage of a try title action.

There appear to be two jurisdictional facts that must be shown to establish standing under G.L. c. 240, § 1. First, it is clear on the face of the statute that only “a person in possession” of the disputed property may maintain a try title action. Id. Second, although less obviously clear, a plaintiff must hold a “record title” to the land in question. Blanchard v. Lowell, supra at 504. Arnold v. Reed, 162 Mass. 438, 440-441 (1894). Here, Bevilacqua has alleged that he resides on the property, a factual assertion that we accept as true and from which we draw the favorable inference that he is “a person in possession” as required by G.L. c. 240, § 1. [FN4] Bevilacqua also claims to hold record title to the property as required to support standing. See Blanchard v. Lowell, supra. In dismissing the petition the judge concluded that the facts alleged by Bevilacqua did not support his claim of record title and that, as a result, Bevilacqua lacked standing. This is the controversy presented on appeal.

Before analyzing whether Bevilacqua has demonstrated the existence of record title, and in light of the fact that it has been more than a century since this court last examined standing under G.L. c. 240, §§ 1-5, we first consider the history and purposes of the statute. [FN5] The initial try title statute was enacted in 1851 and provided:

“Any person in possession of real property, claiming an estate of freehold … may file a petition in the supreme judicial court, setting forth his estate … and averring that he is credibly informed and believes, that the respondent makes some claim adverse to the estate of the petitioner, and praying that he may be summoned to show cause, why he should not bring an action to try the alleged title, if any.” St. 1851, c. 233, § 66.

Prior to enactment of this statute, the principal means of trying title to land was the writ of entry, which permitted a plaintiff to “obtain possession of real estate from a disseisor who is in possession and holds the demandant out.” Mead v. Cutler, 208 Mass. 391, 392 (1911). See Black’s Law Dictionary 472 (6th ed. 1990) (disseisor is “[o]ne who puts another out of the possession of his lands wrongfully. A settled trespasser on the land of another”). See also Black’s Law Dictionary 541 (9th ed. 2009). The writ was limited, however, by the fact that it could only be brought where the plaintiff was “held out.” See Mead v. Cutler, supra. As a result, there were “cases where a party in possession of real estate would be obliged to abandon his accustomed possession and use, in order to [bring a writ of entry and] try the right of an adverse claimant.” Munroe v. Ward, 4 Allen 150, 151 (1862). In recognition of the fact that such abandonment “would be unreasonable and contrary to sound policy,” the try title statute was enacted so that property owners might remain in possession while requiring that adverse claims be either asserted or disavowed rather than lingering indefinitely. Id.

Under the early versions of the try title statute the sole jurisdictional requirement was “actual possession and taking of profits” from the land. Id. at 152. See St. 1873, c. 178; St. 1852, c. 312, § 52; St. 1851, c. 233, § 66. Pursuant to these statutes, record or legal title to the property was irrelevant. See Orthodox Congregational Soc’y v. Greenwich, 145 Mass. 112, 113 (1887) (“[M]ost of the facts … bear only upon the question of title. These we need not consider”); Leary v. Duff, 137 Mass. 147, 149- 150 (1884) (“not of importance that the title asserted by the petitioner rests upon an alleged … adverse possession,” rather than on legal title).

These early enactments were repealed in 1893, however, and the modern form of the statute was adopted. St. 1893, c. 340. One of the principal amendments was the addition of an opening clause, referring to “the record title of real property.” St. 1893, c. 340, § 1. Contrast Pub. Sts. (1882), c. 176, §§ 1, 2. Almost immediately following the 1893 amendment, this court was required to consider the meaning of the new statutory language. In the case of Arnold v. Reed, 162 Mass. 438 (1894), a putative property owner filed a try title action alleging possession and relying on a recorded deed purporting to convey good title to the property. Id. at 439-440. The court held that mere possession was no longer sufficient and that, under the new statute, title appearing on “the record” was also necessary. [FN6] Id. at 440. The court thus read the new introductory clause as limiting the types of disputes– i.e., only claims based on record title–that might be resolved in a try title action. See St. 1893, c. 340, § 1 (“When the record title of real property is clouded by an adverse claim”). The limitation added by the Legislature in 1893 remains operative in the present statute and the jurisdictional requirement of “record title” is thus applicable to Bevilacqua’s claim. Compare G.L. c. 240, § 1 (“If the record title of land is clouded by an adverse claim …”), with St. 1893, c. 340, § 1. We turn, then, to consider Bevilacqua’s various claims to record title.

3. Standing as owner of the property. [FN7] Bevilacqua alleges that he has record title to the property because he is the owner by virtue of a quitclaim deed granted to him by U.S. Bank. There appear to be two theories that underpin this argument. First, the quitclaim deed may be sufficient by itself to support record title to the property. Second, if the quitclaim deed itself does not constitute record title, then that instrument coupled with the chain of grants on which it relies is sufficient as a whole to demonstrate record title. The first theory is incorrect as a matter of law. The second theory is unpersuasive in light of the facts alleged by Bevilacqua.

In addressing the first theory, that a single recorded deed purporting to transfer title is sufficient to establish record title, the Land Court judge made the trenchant observation that such a doctrine would render the “Brooklyn Bridge” problem insoluble. Specifically, the judge wrote that “in the classic example, a litigant could go to the registry, record a deed to the Brooklyn Bridge, commence suit, hope that the true owners ignored the suit or … could not be readily located and [would thus] be defaulted, and secure a judgment.” Leaving aside the fact that public property cannot be the subject of a try title action, see G.L. c. 240, § 5, an interpretation of the try title statute permitting such a result cannot be the law.

We are not persuaded by this “single deed” theory for a number of reasons, not least of which is the fact that there is nothing magical in the act of recording an instrument with the registry that invests an otherwise meaningless document with legal effect. See S & H Petroleum Corp. v. Register of Deeds for the County of Bristol, 46 Mass.App.Ct. 535, 537 (1999) (“The function of a registry of deeds is to record documents. It is essentially a ministerial function …”). Recording may be necessary to place the world on notice of certain transactions. See, e.g., G.L. c. 183, § 4 (leases and deed); G.L. c. 203, §§ 2-3 (trust documents). Recording is not sufficient in and of itself, however, to render an invalid document legally significant. See Arnold v. Reed, 162 Mass. 438, 440 (1894); Nickerson v. Loud, 115 Mass. 94, 97-98 (1874) (“mere assertions … whether recorded or unrecorded, do not constitute a cloud upon title, against which equity will grant relief”). As a result, it is the effectiveness of a document that is controlling rather than its mere existence. See Bongaards v. Millen, 440 Mass. 10, 15 (2003) (where grantor lacks title “a mutual intent to convey and receive title to the property is beside the point”). The effectiveness of the quitclaim deed to Bevilacqua thus turns, in part, on the validity of his grantor’s title. Accordingly, a single deed considered without reference to its chain of title is insufficient to show “record title” as required by G.L. c. 240, § 1.

The second theory supporting Bevilacqua’s ownership claim addresses this point by asserting that the chain of deeds recorded at the registry is sufficient to demonstrate record title. Under this theory Bevilacqua may trace his chain of title back from the quitclaim deed, through the foreclosure deed, and ultimately to the mortgage granted by Rodriguez to MERS as nominee for Finance America. Bevilacqua has alleged, however, that U.S. Bank was not the assignee of the mortgage at the time that it purported to foreclose on the property and conduct a sale pursuant to the power of sale contained in the mortgage.

[FN8]

As we recently held in the Ibanez case, Massachusetts “adhere[s] to the familiar rule that ‘one who sells under a power [of sale] must follow strictly its terms’ ” so, where a foreclosure sale occurs in the absence of authority, “there is no valid execution of the power, and the sale is wholly void.” U.S. Bank Nat’l Ass’n v. Ibanez, 458 Mass. 637, 646 (2011), quoting Moore v. Dick, 187 Mass. 207, 211 (1905). “One of the terms of the power of sale that must be strictly adhered to is the restriction on who is entitled to foreclose.” U.S. Bank Nat’l Ass’n v. Ibanez, supra at 647. See Bongaards v. Millen, supra. By alleging that U.S. Bank was not the assignee of the mortgage at the time of the purported foreclosure, Bevilacqua is necessarily asserting that the power of sale was not complied with, that the purported sale was invalid, and that his grantor’s title was defective. See U.S. Bank Nat’l Ass’n v. Ibanez, supra. In light of its defective title, the intention of U.S. Bank to transfer the property to Bevilacqua is irrelevant and he cannot have become the owner of the property pursuant to the quitclaim deed. See Bongaards v. Millen, supra. Bevilacqua’s theory based on the chain of title is thus unpersuasive.

In this regard we note that Bevilacqua’s try title action based on ownership of the property faces an insurmountable obstacle. A try title action may be brought only where record title is “clouded by an adverse claim, or by the possibility thereof.” G.L. c. 240, § 1. However, the very fact that raises the possibility of an adverse claim–U.S. Bank’s lack of authority to foreclose at the time it purported to foreclose–is fatal to Bevilacqua’s claim to “own” the property. The basic problem is that, instead of presenting a potentially viable claim and seeking to test it against the claims of a rival, Bevilacqua effectively admits that he does not presently have record title and seeks a declaration, if Rodriguez were to default, that the defect is cured. In light of the pleaded facts it is thus impossible for us to conclude that Bevilacqua’s ownership theory demonstrates the jurisdictional facts necessary to maintain a try title action. See G.L. c. 240, § 1.

4. Standing as assignee of the mortgage. As an alternative to the claim that he owns the property in fee simple, Bevilacqua argues that he holds record title because he is the assignee of the mortgage granted by Rodriguez to MERS as nominee for Finance America. Bevilacqua does not develop the argument at length but it is an intriguing one given that Massachusetts is a “title theory” State in which “a mortgage is a transfer of legal title in a property to secure a debt.” U.S. Bank Nat’l Ass’n v. Ibanez, supra at 649. If a mortgagee’s legal title suffices to establish “record title” under G.L. c. 240, § 1, then Bevilacqua may be able to demonstrate standing to proceed with this try title action. We conclude, however, that Bevilacqua’s claim to record title as mortgagee is inconsistent with the relief he seeks, namely, that Rodriguez be compelled either to “show cause why he should not be required to bring an action to try title” or to “be forever barred from having or enforcing any claim in the property.” Accordingly, we conclude that Bevilacqua’s theory of record title as mortgagee is untenable and cannot support standing under G.L. c. 240, § 1.

We begin our analysis of this question by noting that Bevilacqua’s claim to be holder of the mortgage has at least a plausible basis despite the fact that he has never taken an express assignment. This court has held that it is possible for a foreclosure deed, ineffective due to noncompliance with the power of sale, to nevertheless operate as an assignment of the mortgage itself. See Holmes v. Turner’s Falls Co., 142 Mass. 590, 591 (1886); Dearnaley v. Chase, 136 Mass. 288, 290 (1884); Brown v. Smith, 116 Mass. 108 (1874). The theory is that “where a deed of real estate shows by its language that it was intended to pass title by one form of conveyance, by which however title could not pass, courts have made the deed effective by construing it as a deed of some other form, notwithstanding the inappropriateness of the language.” Kaufman v. Federal Nat’l Bank, 287 Mass. 97, 100-101 (1934). Bevilacqua argues in his brief that “the foreclosure deed constituted an assignment of the mortgage on the [p]roperty to Bevilacqua.” As stated, this proposition cannot be correct because Bevilacqua was not a party to the foreclosure deed. Further, Bevilacqua has alleged that U.S. Bank was not the assignee of the mortgage at the time it executed the foreclosure deed so it is impossible for that instrument to be construed as an assignment of mortgage. See U.S. Bank Nat’l Ass’n v. Ibanez, supra at 654 (“Because an assignment of a mortgage is a transfer of legal title, it becomes effective … only on the transfer; it cannot become effective before the transfer”). We assume without deciding, however, that Bevilacqua might be able to establish a chain of assignments passing from his quitclaim deed, through the “Confirmatory Foreclosure Deed,” through the recorded assignment from MERS, and thus ultimately back to Rodriguez’s original deed of mortgage. See supra at [2-3] (regarding drawing of favorable inferences). We may thus assume, without deciding, that there is a factual basis on which Bevilacqua may claim to be the assignee of the mortgage.

The title that Bevilacqua might claim as mortgagee, however, would be inconsistent with the relief that might be provided under G.L. c. 240, §§ 1-5. The problem, from Bevilacqua’s perspective, arises from the nature of a mortgage. In Massachusetts, a “mortgage splits the title in two parts: the legal title, which becomes the mortgagee’s, and the equitable title, which the mortgagor retains.” Maglione v. BancBoston Mtge. Corp., 29 Mass.App.Ct. 88, 90 (1990). The purpose of the split is “to give to the mortgagee an effectual security for the payment of a debt [while] leav[ing] to the mortgagor … the full control, disposition and ownership of the estate.” Santiago v. Alba Mgt., Inc., 77 Mass.App.Ct. 46, 49 (2010), quoting Charlestown Five Cents Sav. Bank v. White, 30 F.Supp. 416, 418-419 (D.Mass.1939). The title held by a mortgagee is defeasible and “upon payment of the note by the mortgagor … the mortgagee’s interest in the real property comes to an end.” Maglione v. BancBoston Mtge. Corp., supra.

Inherent in this concept of the mortgagee’s defeasible title is the mortgagor’s equity of redemption:

“[T]he mortgagor’s equity of redemption [is] the basic and historic right of a debtor to redeem the mortgage obligation after its due date, and ultimately to insist on foreclosure as the means of terminating the mortgagor’s interest in the mortgaged real estate.”

Restatement (Third) of Property (Mortgages) c. 3, Introductory Note at 97 (1996) (addressing common law applicable in both title theory and lien theory States). “[A]n equity of redemption is inseparably connected with a mortgage,” Peugh v. Davis, 96 U.S. 332, 337 (1877), and endures so long as the mortgage continues in existence:

“When the right of redemption is foreclosed, the mortgage has done its work and the property is no longer mortgaged land. Instead, the former mortgagee owns the legal and equitable interests in the property and the mortgage no longer exists.”

Santiago v. Alba Mgt., Inc., supra at 50. See G.L. c. 244, § 18 (mortgagor holds equity of redemption until mortgagor forecloses); Maglione v. BancBoston Mtge. Corp., supra (“upon payment of the note by the mortgagor … the mortgagee’s interest in the real property comes to an end”). Following default, therefore, a mortgagee may enter and possess the property but his or her title remains subject to the mortgagor’s equity of redemption. See G.L. c. 244, §§ 1, 2; Joyner v. Lenox Sav. Bank, 322 Mass. 46, 52-53 & n. 1 (1947); Maglione v. BancBoston Mtge. Corp., supra at 91 (this right of entry and possession distinguishes title and lien theory States). This state of affairs persists until either the mortgagee brings a proceeding to foreclose on the equity of redemption, see Negron v. Gordon, 373 Mass. 199, 205 n. 4 (1977) (listing four methods of foreclosing equity of redemption), or until the mortgagor redeems the property and brings the mortgagee’s interests in the property to an end. See Maglione v. BancBoston Mtge. Corp., supra at 90. See also G.L. c. 260, § 33 (limitations period for foreclosure proceedings). The crucial point is that a mortgage, by its nature, necessarily implies the simultaneous existence of two separate but complementary claims to the property that do not survive the mortgage or each other.

This point controls the present case because a litigant who asserts that he or she is the holder of a mortgage necessarily asserts that the mortgage continues to exist and that the mortgagor’s claims to the property remain valid. For this reason, a plaintiff in a try title action may be heard to claim that a mortgage no longer exists, that claims to the contrary are adverse, and that the putative mortgagee should be required to bring an action trying the claim. See, e.g., Brewster v. Seeger, 173 Mass. 281 (1899). For a plaintiff to both claim record title as holder of a mortgage and to dispute the respondent’s continuing equitable title or equity of redemption would be oxymoronic, however, because the only circumstances in which the respondent’s rights would not be upheld are circumstances in which there is no mortgage for the plaintiff to hold. This is the circumstance in which Bevilacqua finds himself.

To assert that he holds legal title as mortgagee, Bevilacqua must necessarily accept that Rodriguez has a complementary claim to either equitable title (if there has been no default) or an equity of redemption (if default has occurred). In either case, and although their economic interests may diverge, Bevilacqua cannot be heard to argue that Rodriguez’s claim is adverse to his own. This fact necessarily precluded Bevilacqua from establishing a necessary element of his try title action–the existence of an adverse claim. [FN9] See G.L. c. 240, § 1 (action may be brought “[i]f the record title of land is clouded by an adverse claim …”). The legal title possessed by a mortgagee is not, therefore, a basis of standing that would be consistent with maintenance of Bevilacqua’s action against Rodriguez. Accordingly, we conclude that it is not open to Bevilacqua to rely on such title in attempting to demonstrate the necessary jurisdictional facts. [FN10]

5. Standing as bona fide purchaser for value. In concluding his arguments, Bevilacqua asserts that he “could not have known, when he purchased the [p]roperty, that this title problem existed” and that as a result he must be permitted to proceed under the try title statute or be left without an adequate remedy. Certain of the amici expand on this point, arguing that Bevilacqua is a bona fide purchaser for value and without notice such that he holds good title to the property. Under this theory, Bevilacqua’s quitclaim deed transferred good title to the property that, in addition to his possession, satisfies the standing requirements of the try title statute. [FN11] G.L. c. 240, § 1. We need not address the legal merits of the argument because Bevilacqua is not a bona fide purchaser without notice of the defects in his grantor’s title.

We begin analysis of this bona fide purchaser theory by noting that “[t]he law goes a great way in protecting the title of a purchaser for value without notice or knowledge of any defect in the power of the vendor to sell….” Rogers v. Barnes, 169 Mass. 179, 183 (1897). For that reason, the purchaser’s “title is not to be affected by mere irregularities in executing a power of sale contained in a mortgage, of which irregularities he has no knowledge, actual or constructive.” Id. at 183-184. There are limits to the protections provided to bona fide purchasers, however, and “[t]he purchaser of an apparently perfect record title is not protected against all adverse claims.” Brewster v. Weston, 235 Mass. 14, 17 (1920). Where the bona fide purchaser is not protected against an adverse claim the purchaser “must rely upon the covenants of his deed” rather than dispossession of the true owner– that is, there are situations in which it is the purchaser rather than the original owner who must seek recovery from a third person rather than being awarded possession of the property itself. Id. See 3 J. Palomar, Land Titles § 677, at 374-375 (3d ed. 2003) (listing circumstances in which actual facts may rebut presumption of record title and true owner will prevail over innocent purchaser).

Generally, the key question in this regard is whether the transaction is void, in which case it is a nullity such that title never left possession of the original owner, or merely voidable in which case a bona fide purchaser may take good title. See Brewster v. Webster, supra. Cf. Restatement (Second) of Contracts § 7 comment a (1981). Here, the dispute as to title revolves around the validity of the unauthorized foreclosure sale conducted by U.S. Bank. Certain of the amici argue that the category in which such a transaction belongs, void or merely voidable, has not been addressed definitively in Massachusetts. Our recent decision in the case of U.S. Bank Nat’l Ass’n v. Ibanez, 458 Mass. 637, 647 (2011), however, concluded that “[a]ny effort to foreclose by a party lacking ‘jurisdiction and authority’ to carry out a foreclosure under [the relevant] statutes is void.” We decline the invitation to revisit this issue. In any event, a factual prerequisite–purchase by Bevilacqua without notice of the defects in U.S. Bank’s title–does not exist.

Bevilacqua’s petition alleges that a number of documents were recorded with the registry, provides the book and page number applicable to each document, but fails to provide the dates on which recording occurred. We take judicial notice, however, of the fact that the registry assigns book and page numbers to recorded instruments in a sequential manner. See Mass. G. Evid. § 201(b) (2011). We therefore may conclude that instruments with lower book and page numbers were recorded prior to instruments with higher book and page numbers. [FN12] Here, the book and page numbers demonstrate recording of documents in the following order: (i) the mortgage from Rodriguez to MERS (executed on March 18, 2005); (ii) the assignment of mortgage from MERS to U.S. Bank (executed on July 21, 2006); (iii) the purported foreclosure deed from U.S. Bank “as Trustee” to U.S. Bank as trustee under the servicing agreement (executed on June 29, 2006); (iv) the “Confirmatory Foreclosure Deed” from U.S. Bank “as Trustee” to U.S. Bank as trustee under the servicing agreement (executed on October 9, 2006); and (v) the quitclaim deed from U.S. Bank to Bevilacqua (executed on October 17, 2006). We cannot be sure of the precise date on which the foreclosure deed became a matter of public record, but we do know that this occurred after the assignment of mortgage had been recorded. As a result, Bevilacqua must have attempted to purchase the property from U.S. Bank (in some capacity) either when the registry’s records showed the bank to be a complete stranger to title, when the registry’s records showed the bank to be no more than an assignee of the mortgage, or when the registry’s records showed that the bank conducted the foreclosure sale before receiving assignment of the mortgage. In none of these circumstances could we conclude that Bevilacqua is a bona fide purchaser for value and without notice that U.S. Bank’s title was doubtful. See Demoulas v. Demoulas, 428 Mass. 555, 577 (1998) (parties may not “establish themselves as bona fide purchasers simply by claiming that they were ‘blissfully unaware’ of” facts to which they closed their eyes). We therefore are unconvinced by Bevilacqua’s claim to record title based on the theory that he is a bona fide purchaser for value and without notice.

6. Dismissal with prejudice. As a final matter we consider whether the Land Court judge properly specified that Bevilacqua’s complaint be dismissed with prejudice. As discussed above, the precise procedural mechanism under which the judge decided the sua sponte motion to dismiss is unclear. What is clear, however, is that the judge’s dismissal was based on lack of standing and thus want of subject matter jurisdiction. See Mass. R. Civ. P. 12(h)(3) (“Whenever it appears by suggestion of a party or otherwise that the court lacks jurisdiction of the subject matter, the court shall dismiss the action”); Sullivan v. Chief Justice for Admin. & Mgt. of the Trial Court, 448 Mass. 15, 21 (2006), and cases cited (“The issue of standing is one of subject matter jurisdiction”).

A complaint that is dismissed for lack of jurisdiction is not an adjudication on the merits. See Mass. R. Civ. P. 41(b)(3), as amended, 454 Mass. 1403 (2009) (involuntary dismissal or “any dismissal not provided for in this rule, other than a dismissal for lack of jurisdiction … operates as an adjudication upon the merits”). It is thus inappropriate to attach preclusive effects to the dismissal beyond the matter actually decided–the absence of subject matter jurisdiction. See Restatement (Second) of Judgments § 11, at 108 (1982) (“A judgment may properly be rendered against a party only if the court has authority to adjudicate the type of controversy involved in the action”). The obvious rationale for this rule is that a court without subject matter jurisdiction over a controversy is without authority to issue a binding judgment regarding that controversy. See id. at comment a. The conclusion that Bevilacqua lacks standing to bring a try title action is thus binding on him in future actions but dismissal of this action for want of subject matter jurisdiction does not bar him from bringing other actions regarding title to the property.

7. Conclusion. The Land Court judge properly raised the question whether Bevilacqua has record title to the property such that he has standing to bring a try title action. Bevilacqua has identified no basis on which it might be concluded that he has record title to the property such that a try title action may be sustained. As a result, the Land Court was without jurisdiction to hear the try title action. Dismissal of the petition was therefore proper. The dismissal should have been entered without prejudice, however, and we therefore remand to the Land Court for entry of judgment consistent with this opinion.

So ordered.

 

FN1. We gratefully acknowledge the amicus briefs submitted by the American Land Title Association; the Attorney General of the Commonwealth; the Massachusetts Association of Bank Counsel, Inc.; the Mortgage Bankers Association; Professors Adam J. Levitin, Christopher L. Peterson, Katherine Porter, and John A.E. Pottow; and the WilmerHale Legal Services Center of Harvard Law School.

 

 

FN2. It may not be desirable merely to assume the accuracy of a plaintiffs’s

factual assertions. If a plaintiff brings a try title action and the respondent defaults, “the court shall enter a decree that [the respondent] be forever barred from having or enforcing any such claim adversely to the petitioner.” G.L. c. 240, § 2. As a result, a property owner whose whereabouts are unknown and who is not reached through publication notice might be divested by a plaintiff who is put to no greater evidentiary test than having pleaded facts that the court is obliged to accept as true. See Ginther v. Commissioner of Ins., 427 Mass. 319, 322 (1998). But see G.L. c. 240, § 4 (remedies for those dispossessed by default judgment). Here, for instance, there are no recorded instruments in evidence and Bevilacqua merely has alleged their existence and contents.


A better approach, consistent with the procedure followed in the case of a motion to dismiss due to lack of subject matter jurisdiction, may be to place the burden of proof on the nonmoving party (here, Bevilacqua) to prove jurisdictional facts. See, e.g., Caffyn v. Caffyn, 441 Mass. 487, 491 (2004). As discussed further, infra at–, the existence of record title is a requirement for standing under G.L. c. 240, § 1, and thus a jurisdictional fact. That said, application of a preponderance of the evidence standard may be inappropriate at this stage of a try title proceeding if it is indistinguishable from “the question whether [the plaintiff] has a better title [than the respondent]“–a matter that “is not to be determined in these

proceedings, but in the actions which the respondents may be ordered to bring” as a result of the try title action. Blanchard v. Lowell, 177 Mass. 501, 504-505 (1901). Given these difficulties, it may be necessary to adopt a unique standard of review in future try title actions.

 

 

FN3. As discussed further, infra, the structure of the try title statute is a direct reflection of the limitations inherent in the common-law writ of entry. The try title statute may now be something of an anachronism when it is considered that modern statutes are far more flexible than the common-law writ, see G.L. c. 237; that Massachusetts courts are now vested with equity jurisdiction, see, e.g., G.L. c. 185, § 1 (k ); and that declaratory judgment is now available to litigants in this Commonwealth, see G.L. c. 231A inserted by St.1945, c. 582, § 1.

 

 

FN4. One of the amici has appended to its brief a number of deeds referring to the property at 126-128 Summer Street in Haverhill that were recorded between the time Bevilacqua purchased the property and the date on which he filed his petition. Specifically, Bevilacqua recorded a master deed establishing a condominium that consists of four units. Bevilacqua also recorded three deeds transferring units to various third-party purchasers. These deeds and the conveyances they represent are not matters properly before

the court and do not factor into our analysis. Although nonevidentiary, the deeds are nevertheless noteworthy in that they explain why Bevilacqua’s complaint is drafted to imply possession rather than pleading the matter directly, see Connolley, petitioner, 168 Mass. 201, 203 (1897) (“the only question … is whether the petitioner has a record title to the whole estate”), and in that they highlight the concerns addressed, see note 2, supra, regarding the proper standards of review and evidentiary burdens in a try title action.

 

 

FN5. In determining that a plaintiff under G.L. c. 240, §§ 1-5, must possess both record title and possession, the motion judge quoted Daley v. Daley, 300 Mass. 17, 21 (1938), to the effect that “[a] petition to remove a cloud from the title to land affected cannot be maintained unless both actual possession and the legal title are united in the petitioner.” The Daley case is inapposite, however, because it involves a bill to quiet title pursuant to G.L. c. 240, §§ 6-10, rather than an action to try title pursuant to G.L. c. 240, §§ 1-5. See generally R.W. Bishop, Prima Facie Case § 48.5, at 601-602 (5th ed.2005) (intermingling discussion of both try title and quiet title cases in section entitled “Actions to Try Title”).


An action to quiet title is an in rem action, G.L. c. 240, § 10, brought under the court’s equity jurisdiction. See G.L. c. 185, § 1 (k ); First

Baptist Church of Sharon v. Harper, 191 Mass. 196, 209 (1906) (“in equity the general doctrine is well settled, that a bill to remove a cloud from the land … [requires that] both actual possession and the legal title are united in the plaintiff”). In contrast, an action to try title is an action at law brought against the respondent as an individual. See G.L. c. 240, § 2 (“the court shall enter a decree that [specified adverse claimants] be forever barred from having or enforcing any such claim adversely to the petitioner”); Clouston v. Shearer, 99 Mass. 209, 211, 212-213 (1868) (at time try title statute was enacted in 1851, Massachusetts courts did not yet possess general equity jurisdiction that would permit actions to remove cloud from title [not until 1852] ).


The distinction is critical because the plaintiff in a try title action may defeat the specified adverse claims through a default or by showing title that is merely superior to that of the respondent. See G.L. c. 240, §§ 2-3; Blanchard v. Lowell, 177 Mass. 501, 504-505 (1901). In contrast, a quiet title action requires the plaintiff “not merely to demonstrate better title to the locus than the defendants possess, but requires the plaintiff to prove sufficient title to succeed in its action.” Sheriff’s Meadow Found., Inc. v. Bay-Courte Edgartown, Inc., 401 Mass. 267, 269 (1987). See U.S. Bank, Nat’l Ass’n v. Ibanez, 458 Mass. 637, 645 (2011); Loring v. Hildreth, 170 Mass. 328 (1898). Precedent applicable to one statute, although potentially

persuasive, does not control cases brought under the other statute.

 

 

FN6. Interestingly for purposes of this proceeding, in Arnold v. Reed, 162 Mass. 438 (1894), the court was presented with a try title action where the plaintiff relied on a recorded deed reciting that the grantor possessed good title. Id. at 440. “[T]he recitals [were] not true [however], and this would appear by an examination of the records of the Probate Court.” Id. Accordingly, the mere recording of an instrument with the registry of deeds that purports to transfer ownership was insufficient to create standing under the try title statute. Id. But see Connolley, petitioner, 168 Mass. 201, 203-204 (1897) (petitioner had sufficient record title where his grantor had only 255/264th ownership according to registry records, 246/264th ownership according to wills and registry records, and complete but unrecorded ownership due to adverse possession).

 

 

FN7. We refer in Part 3 to Bevilacqua as the owner of the property, using the term “owner” in a colloquial sense, to distinguish this analysis from our later consideration of Bevilacqua’s claim to hold record title as assignee of the mortgage or as a bona fide purchaser without notice.

 

 

FN8. One amicus appended to its brief a copy of the foreclosure deed and the

legal notice announcing the foreclosure sale. That foreclosure deed recites that “U.S. Bank National Association [U.S. Bank] as Trustee [is the] holder of a mortgage from Pablo Rodriguez” while the notice, recorded with the foreclosure deed, states that “[U.S. Bank as trustee] is the present holder” of the mortgage. Neither of these documents is in evidence and, whether he relied on such representations or not, Bevilacqua’s petition directly contradicts the accuracy of the quoted statements. We rely on the facts pleaded in the petition for purposes of this appeal. See supra at–.

 

 

FN9. In addition, it is difficult, if not impossible, to imagine what kind of action Rodriguez might bring to try his title as mortgagor. Presumably Rodriguez would assert that the purported foreclosure sale was ineffective, that no foreclosure has occurred, and that he thus retains an equity of redemption. Bevilacqua necessarily would agree with these claims, having asserted that he is the mortgage holder, so judgment could enter on the pleadings declaring that Rodriguez enjoys an equity of redemption. Such an action would be nonsensical.

 

 

FN10. Bevilacqua asserts that foreclosure is not an adequate remedy in these circumstances because, he argues with emphasis, if he “is required to foreclose on the mortgage … to clean up his title, this will delay his sale or

refinance for a minimum of about seven to nine months.” Foreclosure, however, is the appropriate remedy for a mortgagee seeking to resolve an outstanding equity of redemption. See Negron v. Gordon, 373 Mass. 199, 205 n. 4 (1977) (listing four methods of foreclosing equity of redemption). Nothing contained herein is intended to limit Bevilacqua’s right, if he can show himself to be mortgagee of the property, to pursue foreclosure under the appropriate statutes. The record does not disclose if Bevilacqua presently holds the promissory note secured by Rodriguez’s mortgage. Whether the holder of a mortgage may foreclose the equity of redemption without also holding the note is a question that is not before us.

 

 

FN11. Bevilacqua’s chain of title as a bona fide purchaser necessarily begins with his quitclaim deed from U.S. Bank. In some States, “[i]t is well settled … that one who has only a quitclaim deed to land cannot claim protection as a bona fide purchaser without notice.” Polhemus v. Cobb, 653 So.2d 964, 967-968 (Ala.1995), quoting Gordon v. Ward, 221 Ala. 173, 174 (1930). “In this Commonwealth, [however,] such a deed is as effectual to transfer whatever title the grantor has in the premises, as a deed with full covenants of warranty. The conveyance in either form is voidable, and not void, if fraudulent as to creditors; and, until defeated by a creditor, the title of the grantor passes.” Mansfield v. Dyer, 131 Mass. 200, 201

(1881). See Boynton v. Haggart, 120 F. 819, 822-823 (8th Cir.1903) (history and evolution of decisions regarding quitclaim deeds, recording statutes, and bona fide purchasers). If a grantor has voidable title to a Massachusetts property, therefore, that title may pass through a quitclaim deed to a bona fide purchaser in whose hands the title is no longer voidable.

 

 

FN12. A registry of deeds may employ several assistant registers who process documents. It is thus possible, although irrelevant for purposes of this decision, that documents presented to different assistant registers at nearly the same time may have book and page numbers that do not reflect the precise order of such overlapping presentations.


END OF DOCUMENT

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Mass. high court wades back into foreclosure mess

Mass. high court wades back into foreclosure mess


(Reuters) –

Top Massachusetts judges grilled attorneys on both sides of a widely watched foreclosure case that could impact thousands of property owners across the state, and beyond.

The Supreme Judicial Court of Massachusetts on Monday wrestled over whether faulty mortgages and land records should be left in place as the basis for further property sales.


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[VIDEO] Oral Arguments of BEVILACQUA v. RODRIGUEZ

[VIDEO] Oral Arguments of BEVILACQUA v. RODRIGUEZ


Excellent video…

Question that came up a few times, Why not go after Grantor?

Caveat Emptor ya’ll! Seriously.

Docket # SJC-10880
Date May 2, 2011
Video Link
View oral argument with Windows Media Player
Summary
(prepared by Suffolk University Law School)
Real Property– Whether the plaintiff, who acquired title by a deed after an invalid mortgage foreclosure, has standing to bring a claim in the Land Court to “try title” to the real estate.
Appealed From Land Court
Briefs See selection available in PDF format at Supreme Judicial Court website
Counsel for Appellant
(Appearing)
Bevilacqua: Jeffrey B. Loeb, David Glod
Counsel for Appellee
(Appearing)
Rodriguez:
Amici Curiae The American Land Title Association; Wilmerhale Legal Services Center; Mortgage Bankers Association; Attorney General; Adam J. Levitin; Christopher L. Peterson; Katherine Porter; John A.E. Pottow; The Massachusetts Association of Bank Counsel, Inc.
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S.J.C. AMICUS CURIAE BRIEF OF MA ATTORNEY GENERAL MARTHA COAKLEY | BEVILACQUA v. RODRIGUEZ

S.J.C. AMICUS CURIAE BRIEF OF MA ATTORNEY GENERAL MARTHA COAKLEY | BEVILACQUA v. RODRIGUEZ


SUPREME JUDICIAL COURT
for the Commonwealth
Case Docket
FRANCIS J. BEVILACQUA, III vs. PABLO RODRIGUEZ
SJC-10880

BRIEF OF THE ATTORNEY GENERAL ON BEHALF OF THE
COMMONWEALTH OF MASSACHUSETTS, AMICUS CURIAE

.

EXCERPT:

Statement of the Relevant Facts

The relevant facts are set Forth in the Land Court’s Memorandum and Order dismissing plaintiff’s petition [A24-28] and in the plaintiff’s Petition to Compel Adverse Claimant to Try Title [A3-51.

On March 18, 2005, respondent Pablo Rodriguez granted a mortgage securing 126-128 Summer Street, Haverhill, Massachusetts (the "Property") to Mortgage Electronic Registration Systems, Inc. (''MERS") , as nominee for Finance America, LLC. [A41 In or around April 2006, U.S. Bank, N.A. ("U.S. Bank") initiated foreclosure proceedings without first obtaining a valid, written assignment of the mortgage from Finance America, LLC or its nominee, MERS. [A41 Indeed it was not until after the foreclosure sale, on July 21, 2006 that MERS assigned the mortgage to U . S . Bank. -Id. On October 17, 2006, Mr. Bevilacqua acquired a quitclaim deed from U.S. Bank. [A3-A41]

Argument

This case exemplifies the continuing harms caused by the securitization of mortgage loans and a secondary mortgage market that ignored state law in an effort to sell and resell mortgages and securities backed by mortgages. As this Court so recently observed in U.S. Bank, N.A. v. Ibanez, 458 Mass. 637 (2011), some participants in the secondary mortgage market ignored Long standing requirements of Massachusetts law concerning when and how a mortgage holder may exercise its right to foreclose, resulting in numerous invalid foreclosures. In this case, because U.S. Bank did not hold a valid assignment of the mortgage at the time it initiated foreclosure proceedings, it failed to acquire title through the foreclosure deed. Thus, U.S. Bank’s subsequent conveyance of the Property by quitclaim deed in favor of Mr. Bevilacqua failed to transfer title to the Property to Mr. Bevilacqua. Accordingly, Mr. Bevilacqua has no claim to title to the Property.

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S.J.C. AMICUS CURIAE BRIEF OF PROFESSORS ADAM J. LEVITIN, CHRISTOPHER L. PETERSON, KATHERINE PORTER, JOHN A.E. POTTOW | BEVILACQUA v. RODRIGUEZ

S.J.C. AMICUS CURIAE BRIEF OF PROFESSORS ADAM J. LEVITIN, CHRISTOPHER L. PETERSON, KATHERINE PORTER, JOHN A.E. POTTOW | BEVILACQUA v. RODRIGUEZ


MUST READ…

EXPLOSIVE

SUPREME JUDICIAL COURT
for the Commonwealth
Case Docket
FRANCIS J. BEVILACQUA, III vs. PABLO RODRIGUEZ
SJC-10880

Excerpt:

There is no contention in this case that U.S. Bank, N.A., the trustee of the securitization trust that claimed to hold the Rodriguez note and associated security instrument did not properly foreclose on the Rodriguez property. U . S . Bank, N,A. failed to show that it was the mortgagee, just as it did in United States Bank Nat’l Ass’n v. Ibanez, 458 Mass. 637 (MaSS. 2011). Accordingly, U.S. Bank, N.A., was no more capable of passing on good title to the Rodriguez property than a common thief.2

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Massachusetts Court Hears Pivotal Mortgage-Transfer Case in Foreclosure BEVILACQUA v. RODRIGUEZ

Massachusetts Court Hears Pivotal Mortgage-Transfer Case in Foreclosure BEVILACQUA v. RODRIGUEZ


Knowing what the world knows now on the way they conduct business. If this was a baby stroller or an air bag, do you think they would even question this at all? Selling defective merchandise usually has a mandatory recall.

Now read this carefully and ask yourself this, was this even sound to begin with?

RULES are RULES…

BLOOMBERG-

A Massachusetts man should be allowed to keep property he bought from U.S. Bancorp even though the bank didn’t have the right to foreclose on the previous owner, a lawyer argued before the state’s highest court.

[...]

“If the decision is upheld, and generally applied, it likely will have adverse implications for hundreds or even thousands of Massachusetts property owners if they find themselves in Bevilacqua’s shoes,” the Mortgage Bankers Association wrote in a friend-of-the-court brief.

Read the case below…

Next in the Massachusetts Pipeline: Francis J. Bevilacqua vs. Pablo Rodriguez

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Next in the Massachusetts Pipeline: Francis J. Bevilacqua vs. Pablo Rodriguez

Next in the Massachusetts Pipeline: Francis J. Bevilacqua vs. Pablo Rodriguez


Via: William Alexander Roper, JR.

COMMONWEALTH OF MASSACHUSETTS
THE TRIAL COURT
LAND COURT DEPARTMENT

FRANCIS BEVILACQUA, III v. PABLO RODRIGUEZ

MISC 10-427157
ESSEX, ss.
August 26, 2010

Long, J.

MEMORANDUM AND ORDER DISMISSING PLAINTIFF’S COMPLAINT

Introduction

Plaintiff Francis Bevilaqua holds no title to the property at 126-128 Summer Street in Haverhill. That title is held by defendant Pablo Rodriguez. What Mr. Bevilaqua has is a quitclaim deed from US Bank, N.A., which conducted an invalid foreclosure sale on the property (it was not the holder of the mortgage at the time the sale was noticed and conducted as required by G.L. c. 244, § 14) [Note 1] and thus acquired nothing from that sale. See US Bank v. Ibanez, 17 LCR 202 (Mar. 26, 2009) & 17 LCR 679 (Oct. 14, 2009) and cases cited therein. US Bank therefore had nothing to convey, and its purported conveyance to Mr. Bevilaqua was a nullity. See Bongaards v. Millen, 440 Mass. 10 , 15 (2003).

Despite this, Mr. Bevilaqua now seeks to create a full, fee simple title in himself — quite literally, something from nothing — through the “try title” procedure of G.L. c. 240, §§ 1-5. He cannot do so, for the reasons set forth below. Accordingly, his complaint is DISMISSED in its entirety, with prejudice.

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BLOOMBERG | Faulty Foreclosure Case in Massachusetts High Court May Hurt Home Buyers

BLOOMBERG | Faulty Foreclosure Case in Massachusetts High Court May Hurt Home Buyers


Massachusetts’ highest court will consider whether a home buyer can rightfully own a property if the bank that sold it to him didn’t have the right to foreclose on the original owner.

The state’s Supreme Judicial Court, which agreed last month to take the appeal, already ruled Jan. 7 that banks can’t foreclose on a house if they don’t own the mortgage. The lower- court decision now under review said the buyer of residential property in Haverhill, Massachusetts, never really owned it because U.S. Bancorp foreclosed before it got the mortgage.

“It appears to be the next step in the conversation,” Paul R. Collier III, who represented the borrower in the earlier case, U.S. Bank v. Ibanez, said in a phone interview.

Like the Ibanez case, the court’s decision may resonate with other states as they grapple with the rights of new homebuyers who may be hesitant to complete a purchase for fear of uncertain title, and with how such a trend may hobble the broader housing market.

Claims of wrongdoing by banks and loan servicers triggered a 50-state investigation last year into whether thousands of U.S. foreclosures were properly documented during the housing collapse. Last year, completed foreclosures in Massachusetts rose 32 percent to 12,233 from 9,269 in 2009, according to Boston-based Warren Group, which tracks local real estate.

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ADAM LEVITIN| Ibanez and Securitization Fail

ADAM LEVITIN| Ibanez and Securitization Fail


posted by Adam Levitin
.

The Ibanez foreclosure decision by the Massachusetts Supreme Judicial Court has gotten a lot of attention since it came down on Friday. The case is, not surprisingly being taken to heart by both bulls and bears. While I don’t think Ibanez is a death blow to the securitization industry, at the very least it should make investors question the party line that’s been coming out of the American Securitization Forum. At the very least it shows that the ASF’s claims in its White Paper and Congressional testimony are wrong on some points, as I’ve argued elsewhere, including on this blog. I would argue that at the very least, Ibanez shows that there is previously undisclosed material risk in all private-label MBS.

The Ibanez case itself is actually very simple. The issue before the court was whether the two securitization trusts could prove a chain of title for the mortgages they were attempting to foreclose on.  

There’s broad agreement that absent such a chain of title, they don’t have the right to foreclose–they’d have as much standing as I do relative to the homeowners. The trusts claimed three alternative bases for chain of title:

(1) that the mortgages were transferred via the pooling and servicing agreement (PSA)–basically a contract of sale of the mortgages

(2) that the mortgages were transferred via assignments in blank.

(3) that the mortgages follow the note and transferred via the transfers of the notes.

The Supreme Judicial Court (SJC) held that arguments #2 and #3 simply don’t work in Massachusetts. The reasoning here was heavily derived from Massachusetts being a title theory state, but I think a court in a lien theory state could easily reach the same result. It’s hard to predict if other states will adopt the SJC’s reasoning, but it is a unanimous verdict (with an even sharper concurrence) by one of the most highly regarded state courts in the country.  The opinion is quite lucid and persuasive, particularly the point that if the wrong plaintiff is named is the foreclosure notice, the homeowner hasn’t received proper notice of the foreclosure.

Regarding #1, the SJC held that a PSA might suffice as a valid assignment of the mortgages, if the PSA is executed and contains a schedule that sufficiently identifies the mortgage in question, and  if there is proof that the assignor in the PSA itself held the mortgage. (This last point is nothing more than the old rule of nemo dat–you can’t give what you don’t have. It shows that there has to be a complete chain of title going back to origination.)  

On the facts, both mortgages in Ibanez failed these requirements. In one case, the PSA couldn’t even be located(!) and in the other, there was a non-executed copy and the purported loan schedule (not the actual schedule–see Marie McDonnell’s amicus brief to the SJC) didn’t sufficiently identify the loan. Moreover, there was no proof that the mortgage chain of title even got to the depositor (the assignor), without which the PSA is meaningless: 

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The force behind the Massachusetts decision

The force behind the Massachusetts decision


Today my friend’s history was made. The Massachusetts decision represents a major victory for consumers as well as for the handful of attorneys and advocates who dedicated their lives to protecting the defenseless. Perhaps the critical game-changing event in the Massachusetts litigation was the Amicus Brief submitted by Marie McDonnell setting forth and outlining the securitization paradigm and the defects in the chain of title.

Her analysis exposed both the material deficits contained and the subsequent fraudulent actions taken by the banks in foreclosing the properties. If you recall correctly it was Marie who first made the discovery in Antonio Ibanez’s loan in which it may have been securitized twice? Lets not forget who the robo-signer was that assigned the mortgage to U.S. Bank but non other than Linda Green.

And after two and half very long years post-foreclosure who would have thought that Mark and Tammy LaRace would move back home!

I would like to personally thank all the attorney’s involved and a special thanks to my good friend Marie McDonnell for her brilliant work and who deserves a mighty high five from all of us…

Marie McDonnell is the President of McDonnell Property Analytics, Inc. (www.mcdonnellanalytics.com), a company dedicated to helping consumers, and training and supporting attorneys in defending foreclosures.

© 2010-13 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.
www.StopForeclosureFraud.com


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WAPO| Mass. court ruling has potential to void thousands of foreclosures

WAPO| Mass. court ruling has potential to void thousands of foreclosures


Posted at 12:26 PM ET, 01/ 7/2011

By Ariana Eunjung Cha

The Massachusetts Supreme Court on Friday upheld a lower court ruling voiding two foreclosures because the banks failed to show the proper paperwork to prove they owned the loans-a decision that challenges the way mortgages were bundled and sold around the world.

Shares of Wells Fargo and U.S. Bancorp–the banks involved in the case–as well as those of other banks fell following the announcement of the decision. Wells Fargo was down 3.4 percent and US Bancorp 1.1 percent at midday.

The Massachusetts court is the highest to ruled on this issue and the decision has the potential to invalidate thousands of foreclosures across the state. It also provides more ammunition to borrowers in other states who could push the case to the U.S. Supreme Court. If the nation’s highest court rules that these transfers are not legal, the multi-trillion-dollar mortgage-backed securitization industry could face massive liability.

© 2010-13 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.
www.StopForeclosureFraud.com


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