Judicial Branch saves US Private Property Rights, MASS Supreme Court throws out ‘securitized servicer foreclosures’ by Wells and US Bank in Ibanez, LaRace cases
Update: Full ruling here. And some appropriate theme music from Judas Priest~
Update 2: From the ruling:
Focusing first on the Ibanez mortgage, U.S. Bank argues that it was assigned the mortgage under the trust agreement described in the PPM, but it did not submit a copy of this trust agreement to the judge. The PPM, however, described the trust agreement as an agreement to be executed in the future, so it only furnished evidence of an intent to assign mortgages to U.S. Bank, not proof of their actual assignment. Even if there were an executed trust agreement with language of present assignment, U.S. Bank did not produce the schedule of loans and mortgages that was an exhibit to that agreement, so it failed to show that the Ibanez mortgage was among the mortgages to be assigned by that agreement. Finally, even if there were an executed trust agreement with the required schedule, U.S. Bank failed to furnish any evidence that the entity assigning the mortgage–Structured Asset Securities Corporation–ever held the mortgage to be assigned. The last assignment of the mortgage on record was from Rose Mortgage to Option One; nothing was submitted to the judge indicating that Option One ever assigned the mortgage to anyone before the foreclosure sale. [FN19] Thus, based on the documents submitted to the judge, Option One, not U.S. Bank, was the mortgage holder at the time of the foreclosure, and U.S. Bank did not have the authority to foreclose the mortgage.
Continues after the break:
“Second, the plaintiffs contend that, because they held the mortgage note, they had a sufficient financial interest in the mortgage to allow them to foreclose. In Massachusetts, where a note has been assigned but there is no written assignment of the mortgage underlying the note, the assignment of the note does not carry with it the assignment of the mortgage. Barnes v. Boardman, 149 Mass. 106, 114 (1889). Rather, the holder of the mortgage holds the mortgage in trust for the purchaser of the note, who has an equitable right to obtain an assignment of the mortgage, which may be accomplished by filing an action in court and obtaining an equitable order of assignment. Id. (“In some jurisdictions it is held that the mere transfer of the debt, without any assignment or even mention of the mortgage, carries the mortgage with it, so as to enable the assignee to assert his title in an action at law…. This doctrine has not prevailed in Massachusetts, and the tendency of the decisions here has been, that in such cases the mortgagee would hold the legal title in trust for the purchaser of the debt, and that the latter might obtain a conveyance by a bill in equity”). See Young v. Miller, 6 Gray 152, 154 (1856). In the absence of a valid written assignment of a mortgage or a court order of assignment, the mortgage holder remains unchanged. This common-law principle was later incorporated in the statute enacted in 1912 establishing the statutory power of sale, which grants such a power to “the mortgagee or his executors, administrators, successors or assigns,” but not to a party that is the equitable beneficiary of a mortgage held by another. G.L. c. 183, § 21, inserted by St.1912, c. 502, § 6.”
FINALLY!! A VICTORY FOR THE LITTLE GUY!! AHOOGA!! Massachusetts SCOTUS finds securitization-industry practices violate real- estate law governing how mortgages may be transferred and throws out foreclosures.
The Judiciary apparently feels strongly about the US Constitution which says Private Property will not be seized without DUE PROCESS, something the TBTF banksta frakkers have thrown unda da bus with MERS title/note transfer backdated recordations.
YAY Massachusetts Supreme!!
STOPFORECLOSUREFRAUD has the scoopage which is breaking all over CNBC FoxBiz now, the Legislature and Executive led by WE LOVE BANKSTAS Geithner and Obama will no doubt be scrambling for a way to BAIL OUT THE BANKS AGAIN.
Reminder, they JUST bailed out BAC, AGAIN, by having FAN FRED settle the putbacks for a PITTANCE, leaving who? who? youuu guessed it, TAXPAYERS on the hook for the losses instead of BofA…
Naked Capitalism discussed the pending ruling yesterday, and its ramifications, God Willing SCOTUS will rule with the CONSTITUTION. MERS is unconstitutional, period.
…The case in question is referred to as Ibanez. The local court ruled against the banks trying to foreclose on a house because the note was transferred after the servicer initiated foreclosure proceedings, a clear no-no (provided the judge is awake and not reflexively pro-bank). The plaintiffs then tried arguing that the governing agreement, the pooling and servicing agreement, effectuated the transfer (we’ve called this the “intent works” claim, which actually is a valid notion in other areas, but looks to be quite a stretch here given the very specific stipulations of the PSA and the fact that enforcement of a mortgage requires in most states that the party be a “holder”, meaning have possession of the instrument, in this case the borrower note, and be the legally proper party to have it, which means that it be signed over to that party OR be endorsed in blank). The lower court judge nixed that notion too because the assignment of the mortgage (the lien) had not been recorded in the local jurisdiction, nor had the mortgage assignment named a specific assignee (in other words, the assignment was also in blank).
Even though state law, both statutory and case law, varies to some degree on these matters, state supreme courts have also cited rulings of other state courts in decisions against MERS when it has tried foreclosing in its own name (the party foreclosing should be the note holder, which MERS acknowledges that it is not). So a Mass. decision would potentially influence rulings in other states….
Massachusetts’s highest court is poised to rule on whether foreclosures in the state should be undone because securitization-industry practices violate real- estate law governing how mortgages may be transferred.
The fight between homeowners and banks before the Supreme Judicial Court in Boston turns on whether a mortgage can be transferred without naming the recipient, a common securitization practice. Also at issue is whether the right to a mortgage follows the promissory note it secures when the note is sold, as the industry argues…
“This is the first time the securitization paradigm is squarely before a high court,” said Marie McDonnell, a mortgage-fraud analyst in Orleans, Massachusetts, who wrote a friend-of-the-court brief in favor of borrowers. The state court, under its practices, is likely to rule by next month…
If loans weren’t transferred properly, the banks that sponsored such trusts may have to repurchase them, Adam J. Levitin, an associate professor at Georgetown University Law Center in Washington, said in prepared testimony in the U.S. House of Representatives in November….
Naked Capitalism also reported yesterday that the US Trustee is siding with borrowers in this MERS fiasco:
US trustee, which is a Department of Justice overseer of bankruptcy courts, in two cases in Albany, New York (hat tip April Charney). In both, the US trustee has filed responses which are effectively in support of the debtor (the bankrupt borrower) and in opposition to creditors, which in this case are servicers claiming to act on behalf of securitization trusts. The issue? The parties trying to foreclose haven’t presented a document trail that the bankruptcy trustee finds persuasive.Both cases, one with GMAC, the other with BAC as the servicer, both involve a foreclosure mill, the Baum Law Firm, which had been sanctioned and fined for submitting pleadings with documentation defects. As the first pleading, the one with BAC as plaintiff, noted “The state court judge
called the Baum Firm’s actions ‘reprehensible.’”
The underlying issue is pretty simple, a failure to prove standing. Again from the BAC case:
The Debtor and his wife gave the Mortgage to Home Funding Finders, LLC (“HFF”) on or about September 8, 2004 as collateral security for a Note in the principal amount
of $125,000 (“Note”)….
With respect to BAC, there is no document in the record establishing that either the Note or the Mortgage were assigned to BAC. The assignment attached to the proof of claim shows a transfer of the right in the mortgage to Countrywide. There is nothing to indicate that the Note also was assigned. If BAC is not the holder of the Note, then there is no basis for the claim. As such, BAC is not a “creditor” of this Debtor as that term is defined in the Bankruptcy Code and lacks statutory authority to file a proof of claim.
New York has new standards requiring that attorneys certify the accuracy of statements submitted to courts in foreclosure cases. This filing notes the failure to take these steps.