Where a pool of mortgages is assigned to a securitized trust, the executed agreement, with a schedule of the pooled mortgage loans that clearly and specifically identifies the mortgage at issue as among those assigned, may suffice to establish the trustee as the mortgage holder. However, there must be proof that the assignment was made by a party that itself held the mortgage. A foreclosing entity may provide a complete chain of assignments linking it to the record holder. The foreclosing entity must hold the mortgage at the time of the notice and sale in order to have the authority to foreclose under the power of sale.
On July 5, 2007, U.S. Bank, as trustee, foreclosed on the mortgage of Antonio Ibanez, and purchased the Ibanez property at the foreclosure sale. On the same day, Wells Fargo, as trustee, foreclosed on the mortgage of Mark and Tammy LaRace, and purchased the LaRace property at that foreclosure sale. In September and October of 2008, U.S. Bank and Wells Fargo, the plaintiffs, brought separate actions in the Land Court under G. L. c. 240, § 6, which authorized actions to quiet or establish the title to land situated in the commonwealth or to remove a cloud from the title thereto. The two complaints sought identical relief – first, a judgment that the right, title, and interest of the mortgagor (Ibanez or the LaRaces) in the property was extinguished by the foreclosure. Second, a declaration that there was no cloud on title arising from publication of the notice of sale in the Boston Globe. And third, a declaration that title was vested in the plaintiff trustee in fee simple. U.S. Bank and Wells Fargo each asserted in its complaint that it had become the holder of the respective mortgage through an assignment made after the foreclosure sale. On March 26, 2009, judgment was entered against the plaintiffs. The trial court ruled that the foreclosure sales were invalid because, in violation of G. L. c. 244, § 14, the notices of the foreclosure sales named U.S. Bank (in the Ibanez foreclosure) and Wells Fargo (in the LaRace foreclosure) as the mortgage holders where they had not yet been assigned the mortgages. The trial court found, based on each plaintiff's assertions in its complaint, that the plaintiffs acquired the mortgages by assignment only after the foreclosure sales and thus, they had no interest in the mortgages being foreclosed at the time of the publication of the notices of sale or at the time of the foreclosure sales. The plaintiffs then moved to vacate the judgments which the trial court denied.
Did the trial court err in its decision to enter judgment against the plaintiffs?
The Court held that the plaintiffs, who were not the original mortgagees, failed to make the required showing that they were the holders of the mortgages at the time of foreclosure. According to the Court, under § 14 and Mass. Gen. Laws ch. 183, § 21, plaintiffs had the authority to exercise the power of sale contained in the mortgages only if they were the assignees of the mortgages at the time of the notice of sale and the subsequent foreclosure sale. Although the mortgage loans were pooled together in a trust and converted into mortgage-backed securities, the mortgages securing the notes were still legal title to property and had to be treated as such. As the securitization documents plaintiffs submitted to the trial court post-judgment did not establish valid assignments that made them the holders of the mortgages before the notice of sale and the foreclosure sale, the Court determined that they had not been entitled to a declaration of clear title. As such, the Court concluded that plaintiffs’ requests for a declaration of clear title were properly denied.