MA Fed Judge: Non-Payment Doesn’t Make Homeowner an Outlaw Without RIghts


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EDITOR’S NOTE: A STEP FORWARD AND A STEP BACKWARD. THE JUDGE ALLOWED THE FORECLOSURE TO PROCEED DESPITE NUMEROUS SHORTCOMINGS IN THE PROCESS. Bu the Court’s analysis and conclusions on the issues leading up to its ruling are educational, to say the least and contain valuable pieces of information that can be used in other jurisdictions.

“It is clear … that Culhane is substantially behind in paying her mortgage [EDITOR”S NOTE: The assumption that there is a mortgage to pay and that the balance is what is claimed is not challenged by the homeowner] and appears unable to remediate her default. This, however does not render her an outlaw, subject to having her home seized by whatever bank or loan servicer may first claim to it.”

“Without a claim to the underlying debt, MERS …cannot exercise the power of sale regardless of the language in the mortgage contract giving it this power. That the mortgagor consented to this contractual language does not operate as a waiver of the law’s protection against foreclosure by the wrong entity.”

“an effort to foreclose by an entity lacking ‘jurisdiction and authority’ to carry out a foreclosure — i.e., not holding the mortgage at the time of notice and sale — is void.”

“MERS does not input any of the information in its registry and makes no representations or warranties regarding its accuracy or reliability.”

“MERS’s position that it can be both mortgagee and an agent of the mortgagee is absurd, at best…. MERS readily concedes that it doels not own mortgage loans and “has no rights whatsoever to any payments made on account of such mortgage loans, to any servicing rights related to such mortgage loans, or to any mortgaged properties securing such mortgage terms” [Editor’s note: This will come as a surprise to those Judges who allowed mortgages to be foreclosed in the name of MERS and to those holding ‘Naked title” to such property which still is vested in the homeowner who was foreclosed.]


Culhane v Aurora Loan Services of Nebraska


Massachusetts District Court Judge Young issued an order ruling in favor of Aurora Loan Services when Aurora filed for Summary Judgment.

A copy of the 59 page order can be found at this link.  The decision is full of commentary about Mortgage Electronic Registration System (MERS).

If you do not want to read the 59 page order, then Bloomberg Business Week wrote a quick synopsis of the decision.  I have included an excerpt from Bloomberg Business Week article below.  The full write up can be found on this page.

MERS Foreclosures Held Valid under Massachusetts Law

“The Mortgage Electronic Registration System, known as MERS, complies with Massachusetts law and allows mortgages to be foreclosed assuming several simple conditions are met, U.S. District Judge William G. Young in Boston ruled on Nov. 28 by handing down a 59-page opinion. Young characterized MERS as the “Wikipedia of land registration systems.”

Near the end of the opinion, Young wrote a six-page, single-spaced footnote saying that the result may have been different were the case in state court where the judges have greater ability to modify state judge-made law in response to novel factual issues.

Before foreclosure was initiated, the mortgage note was assigned to a bank serving as trustee holding securitized mortgages. The mortgage had been assigned by MERS to the servicer for the bank, as trustee.

Young interpreted Massachusetts law as requiring the party foreclosing to be the holder of the mortgage and also to own the mortgage note or be the servicer for the noteholder.

In the case before him, the servicer was wearing both hats and thus was entitled to foreclose, Young ruled. Young declined to follow several Massachusetts cases holding that the holder of the mortgage and note need not be the same.

Young described in detail how individuals not associated with MERS can be deputized as officers of MERS authorized to assign mortgages and mortgage notes. Young said he was “deeply troubled that, with little or no oversight, individuals without any tie to or knowledge of the company on whose behalf they are acting may assign mortgages – that is, they may transfer legal title to someone else’s home.”

Young’s decision may not hold in states with different real estate laws.

In a case earlier this year called Veal v. American Home Mortgage Servicing Inc., the Bankruptcy Appellate Panel for the 9th Circuit denied foreclosure when the holder of the mortgage couldn’t prove it was also the owner of the mortgage note. To read about the Veal case, click here for the June 14 Bloomberg bankruptcy report.

The Massachusetts case is Culhane v. Aurora Loan Services of Nebraska, 11-11098, U.S. District Court, District of Massachusetts (Boston).”


9 Responses

  1. […] Taken from: MA Fed Judge: Non-Payment Doesn’t Make Homeowner an Outlaw Without RIghts […]

  2. On Dec. 1, 2011, I attended a hearing on “Motion for Authoriziation of Sale” in the non-judicial foreclosure state of Colorado. I was the Respondent who had filed a 15 page “Verified Response, Objections and Afirmative Defenses” Response that also contained 11 Exhibits with 5 subsections totaling 29 pages as well as 2 documents from the Clerk and Rrecorders Office, certified of course.

    The Petitioner, Bank of America, represented by local Counsel DIDN’T SHOW UP. The Court stated that Counsel had probably assumed that the Court would not let me proceed so they saw no reason to be there, however, the Court did let me proceed and it accepted my exhibits and a 30 minute hearing ensued. Who do you think acted as advocate for the Petitioner, the District Court Judge presiding over the proceedings.

    The Judge argued BAC’s case and countered my arguments as though he were paid counsel for Petitiner, he also admitted and sustained several of my arguements including the facts that fraudulent documents had been submitted to the clerk and recorders office and the court and that no chain of custody or title existed showing that BAC was the “real party in interest” to the proceedings.

    He then proceeded to tell me how the OCC had seized all of Countrywides assets and then sold them to BAC and that is how they came to be in possession of my Trust Deed, notwithstanding, that my loan had been securitized 4 years before this allegeded seizure had taken place. We all know that BAC acquired Countrywide by purchase for about 4 Billion in 2008 but it matters not how it took place.

    The Judge then granted BAC’s Petition and granted authorization to proceed with the foreclosure sale stating that BAC was not foreclosing on the Note (that I had shown they did not own) but rather on the Deed of Trust (which I had just shown the court was done by assignment by an asst. secretary of MERS who had died of cancer just 5 days after she allegedly made the assignment, although she had been bed ridden for sometime with that terrible illness before her death).

    Fraud, altered and corrupted documents and false statements of fact in foreclosure proceedings are no longer enough to disqualify petitioners from having their motions granted by the courts, nor do the parties even have to show up in court.

    Three days later I am still reeling from what has happened and I have ordered the transcripts fromthat hearing because even now I don’t believe what I heard and I was there.

    There is a new organization looming on the horizon,, NinetyNine-One-Twelve, the purpose of which will be to see that 99 cases are filed in the courts for every one foreclosure taken by BAC in every 12 months. At the very minimal cost of defending against these cases BAC should be insolvent within a very short period of time. We can and we will use the system to defend ourselves even if it means playing by theri rules, which is to say that there are not rules.

    Good luck to you all in this down and dirty street fight.

    Ding Dong, Justice is Dead.


  3. That is awesome news Gregory lets hope the others in the pipeline start to see favorable rulings in Virginia. Congratulations and Thank You for posting we need more news like this in Virginia.

  4. @Johngault,

    Your heart must be going out to a LOT of people, then. ‘Cuz pretty much everyone who’s ended up foreclosed since 2008 (implementation of HAMP, I believe…) tried in good faith the mod first and was told the exact same thing: default for a couple of months first and then, we’ll talk. They did just that and Boom! Foreclosure!

    If I recall, an Ohio judge recently got screwed that exact same way… Too bad he was a probate judge, not privvy to banks shananigans. I can imagine if it had been a BK judge like Boyko…

    The bastards!

  5. There is a name at law for it when a party in a servicer’s position encourages another party, the homeowner, to do something, like default on payments, which are adverse to the homeowner’s position and interest. Before your default you are not in a take it or leave it position. This isn’t just bs, it’s a tort if not criminal. I hope attorneys reading here will put a legal name on this lowest of insults to injury and please do so quickly.

    The homeowner’s relationship with the servicer is (unfortunately in this regard) not contractual, so the allegation must sound another way unless the homeowner could be found to be some kind of quasi-party to the servicing contract (?). But I know a proper charge that will stick is here somewhere and I hope it is found soon, because this is so wrong. It’s legally and morally absurd: you must hurt yourself and pretty much fatally before you may be ‘assisted’. We all know we are told this for a reason which is in someone else’s interest, not ours. One thing to do is figure out what that is beyond speculation and expose it. I think the clues if not answers are in FNMA’ s modification guidelines / mandates.

    I put my two cents in yesterday about this Culhane case (thought the judge misinterpretted a statute, etc.), but I read in there that a homeowner has a right to appeal a HAMP modification denial. There were no further clues about how this is done, though.

    I’ve never been thru the modification scam, but for what it’s worth, it’s number two on my own hit list (right after MERS) and many hearts including mine bleed for those of you who have been subjected to this inhumane and barbaric treatment.

  6. BRYLLAW LITIGATION: First quiet-title victory in Virginia (by default): first-mortgage deed of trust declared null and void:

  7. Carie,

    I understand your frustration but you need to look at the dates. At best, they left their house in 2010. If you recall, last year, no one knew much of anything about the fraud(s) committed. Since then, thousands of attorneys have made it their mission to assist us.

    Also, (and I do understand their position, although it was their downfall) the family opted against standing up to the bank for fear of traumatizing the children. Again, i understand that you would want to protect the children. Unfortunately, most of the wrongful foreclosures took place because people didn’t fight. They didn’t know how to and fear got the best of them.

    Fost forward one year and the landscape has changed. Not by 180 degrees, I know that, but it has changed. That’s what we need to focuse on. Otherwise, we’ll do what everyone else does: fold like a cheap suit and throw in the towel.


    Family Wrongly Booted From Home Returns To Wreckage By Teke Wiggin | Posted Dec 1st 2011 10:20AM

    Amid the avalanche of foreclosure proceedings unleashed by the housing crisis, thousands of families may have been illegally booted from their homes.

    The story of the King family, recently reported by WLUK FOX 11, offers a nightmare scenario of the hardship a family may endure because of such wrongful foreclosures.

    The Kings returned this fall to their old home in the town of Clayton, Wis., to find it in utter ruin: The basement was flooded in eight feet of water, the walls covered with mold and the kitchen littered with mouse droppings.

    Their ill-fated home had sat unoccupied for more than a year, after the family succumbed to pressure from Bank of America, who notified them that their home would be subject to foreclosure because they had missed a mortgage payment. The Kings, who have eight children, knew that they had actually made their payments but gave in to the bank in order to shelter their children from the rocky proceedings.

    “We didn’t want to further traumatize our children by having a sheriff show up,” Christina King told WLUK.

    Originally, in 2009, the family had applied for the Home Affordable Modification Program, an initiative launched by the Obama administration that allows qualified borrowers to receive interest rate reductions on their mortgages. The program, which was recently modified so that it could reach more beleaguered homeowners, would have provided significant relief to the Kings by reducing their rate from 10 percent to 4 percent.

    But after a year of cooperating with the bank under the terms of the program, the Kings were informed that they had missed a payment during the program’s trial period. Then a steady tide of foreclosure notices arrived, prompting the family to move into a rental property.

    Fast forward by about a year, to when the family receives a notice from Bank of America.

    “In a previous letter to you, we told you that … you missed a Trial Period Plan Payment. However, this was incorrect,” it reads, according to WLUK. The letter also reportedly informs the family that their mortgage actually was approved for HARP.

    The Kings return home, perhaps thinking that their long streak of misfortune may finally have come to an end. Not so. They find a house that has fallen into such disrepair that a contractor estimates that the cost of fixing it exceeds its value.

    “It’s really awful, it’s really awful what was done to us,” King told WLUK.

    Unfortunately, the story of the Kings is only one of many examples of families who have suffered unjustly at the hands of mortgage lenders.

    The practice of “robosigning,” which refers to a range of foreclosure paperwork abuses, has launched various probes around the country, including an investigation led by a broad coalition of state attorneys general which reportedly could end up costing banks upward of $20 billion in a settlement. Setting a precedent, Nevada recently filed criminal charges for robosigning by indicting two staffers at a mortgage company for directing employees to falsely notarize foreclosure documents and forge signatures.

    And these proceedings have had a very real impact on homeowners. One homeowner in Pittsburgh had her home — and her parrot — mistakenly seized by Bank of America, while another family in Houston faced foreclosure simply because their property title wasn’t properly transferred.

  9. There’s a vast amount of homeowners’ that became delinquent at the encouragement of the banks. In the beginning they tell you if you are not delinquent, they cannot help you. You must be 2-4 months behind in your payments for consideration. That’s where the fun begins. Generally after the default, they encourage, they will offer you a forbearance plan of 2-3 times your mortgage payment, giving them tens of thousands of dollars over what’s owed. Then some homeowners’ may try to get current, after realizing the forbearance is unreasonable and unaffordable. That’s the next shock, they refuse to take payments, if the balance is not paid in full, with interest and fees. That is now the climax, the acceleration of your mortgage and subsequent foreclosure. Few people have deliberately gotten behind and not vigorously tried to resolve their situation. This is a misstatement by the banks, judges and editorials. Outright lies are being spewed and that has been perpetuated, by the majority of people, not living the nightmare.

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