Opinion
14-P-1533
09-30-2015
GISELA MABEL CARABALLO v. U.S. BANK, N.A., trustee.
NOTICE: Summary decisions issued by the Appeals Court pursuant to its rule 1:28, as amended by 73 Mass. App. Ct. 1001 (2009), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
The plaintiff, Gisela Mabel Caraballo, appeals from a Superior Court judgment in favor of the defendant, U.S. Bank, N.A. (U.S. Bank), as trustee. Caraballo claims that U.S. Bank was not the holder of the mortgage at the time of the foreclosure and therefore lacked the authority to foreclose. Additionally, Caraballo asserts that U.S. Bank failed to strictly comply with the statutory provisions governing the foreclosure of her home. We affirm.
1. Authority to assign mortgage to U.S. Bank and U.S. Bank's standing to foreclose. Caraballo asserts that Mortgage Electronic Registration Systems, Inc. (MERS), lacks the authority, as nominee, to assign the mortgage where the original lender is defunct. Caraballo also argues that U.S. Bank lacked standing to foreclose because it was not the proper mortgagee, and thus, the foreclosure is invalid. We disagree.
a. MERS's authority to assign mortgage to U.S. Bank. "The dissolution of the original lender does not affect MERS' authority to assign a mortgage." Rosa v. Mortgage Electronic Registration Sys., Inc., 821 F. Supp. 2d 423, 431 (D. Mass. 2011). MERS generally holds bare legal title to the mortgage security instrument. Haskins v. Deutsche Bank Natl. Trust Co., 86 Mass. App. Ct. 632, 640 (2014). Under our law, "a mortgage and the underlying note can be split," Eaton v. Federal Natl. Mort. Assn., 462 Mass. 569, 576 (2012), and the mortgagee need not "possess any scintilla of a beneficial interest in order to hold the mortgage," Culhane v. Aurora Loan Servs. of Neb., 708 F.3d 282, 293 (1st Cir. 2013). "Absent a provision in the mortgage instrument restricting transfer[,] . . . a mortgagee may assign its mortgage to another party." Id. at 292.
The unanimity requirement in Eaton, supra at 588-589, was given prospective effect only. In Sullivan v. Kondaur Capital Corp., 85 Mass. App. Ct. 202, 210 (2014), we rejected the argument that pre-Eaton cases require the mortgagee to possess both the legal and the equitable interests at the time of transfer of any recorded mortgage interest.
Here, MERS acted within its authority as mortgagee and nominee for Opteum Financial Services, LLC (Opteum), when it assigned Caraballo's mortgage to U.S. Bank after her default. Caraballo's security instrument granted MERS the right to "foreclose and sell the Property; and to take any action required of Lender including, but not limited to, releasing and canceling this Security Instrument." The fact that Opteum was defunct when MERS assigned the mortgage is of no moment because MERS at the time of the assignment still held the record legal interest in the mortgage, see Sullivan v. Kondaur Capital Corp., 85 Mass. App. Ct. 202, 210 (2014), and was granted such authority to assign the mortgage in the security instrument. Caraballo's argument fails as matter of law.
b. U.S. Bank's authority to foreclose. Massachusetts is a nonjudicial foreclosure state. U.S. Bank Natl. Assn. v. Ibanez, 458 Mass. 637, 645-646 (2011). Thus, once a mortgage holder complies with its statutory obligations, it may foreclose on the property, through the statutory power of sale, if such power is granted by the security instrument. Id. at 646. "The 'statutory power of sale' can be exercised by 'the mortgagee or his executors, administrators, successors or assigns.'" Id. at 647 (citation omitted). Here, Opteum is the initial holder of the note and MERS is listed as nominee and as mortgagee in the security instrument signed by Caraballo. At least once the original lender, Opteum, dissolved, MERS had full authority to assign its interest to U.S. Bank. Culhane, 708 F.3d at 292. Once MERS properly assigned the mortgage, U.S. Bank had full authority, through the security instrument, to initiate foreclosure proceedings against Caraballo and to exercise the statutory power of sale. See Ibanez, supra at 647.
2. Section 35A notice. Caraballo asserts that the G. L. c. 244, § 35A, notice was defective because it identified Midland Mortgage Co. as the mortgagee, rather than U.S. Bank or MERS. In U.S. Bank Natl. Assn. v. Schumacher, 467 Mass. 421, 431 (2014), the Supreme Judicial Court concluded that the required § 35A notice is not part of the foreclosure process, but rather "is designed to give a mortgagor a fair opportunity to cure a default before the debt is accelerated and before the foreclosure process is commenced through invocation of the power of sale." In Haskins, 86 Mass. App. Ct. at 641, this court rejected the plaintiff's contention that the § 35A notice was defective because it identified the servicer as the mortgagee. We held that with respect to the § 35A notice, a mortgage servicer could be encompassed within the term "mortgagee," when "[v]iewed against the statutory objective of furnishing a mortgagor with the information necessary to contact the party from whom information about the loan may be obtained, to whom any curative payment may be made, or with whom modification discussions might be conducted." Id. at 640-641.
We discern no merit in Caraballo's contention that the § 35A notice was defective because it identified Midland Mortgage Co. as the mortgagee. The June, 2011, notice of default sufficiently notified Caraballo (1) that her mortgage was in default; (2) the total amount of her delinquency; (3) the address where she should send curative payments; (4) contact information for her servicer and for housing assistance agencies; and (5) the consequences of her failure to cure the default within 150 days. Although the judge did not have the benefit of Haskins, it directly resolves this issue. As the judge properly determined, the notice was proper and sufficient to serve its purpose.
3. Mortgage securitization. Caraballo also claims that the securitization of her mortgage loan destroys the underlying note and mortgage. However, our courts have consistently rejected this view of mortgage securitization. "Where . . . mortgage loans are pooled together in a trust and converted into mortgage-backed securities, the underlying promissory notes serve as financial instruments . . . for investors, but the mortgages securing these notes are still legal title to someone's home or farm and must be treated as such." Ibanez, 458 Mass. at 649. As the judge correctly noted, our courts have unambiguously settled this issue and Caraballo fails to allege a specific injury as a result of the securitization of her mortgage. Thus, this argument fails as matter of law.
Caraballo raises issues with the power of attorney and the certificate of entry for the first time in her brief; as such these arguments are waived. See Kennie v. Natural Resource Dept. of Dennis, 451 Mass. 754, 760 n.13 (2008).
Judgment affirmed.
By the Court (Meade, Wolohojian & Milkey, JJ.),
The panelists are listed in order of seniority. --------
Clerk Entered: September 30, 2015.