U.S. Bank National Association v. Ibanez

Brief Fact Summary.

Plaintiffs, two banks, brought requested the court to declare them to be the fee simple owners of two separate properties that each foreclosed on. However, based on the documentation provided to the court, the court denied the declaration. Plaintiffs appealed.

Synopsis of Rule of Law.

When a party hold the mortgage at the time of the notice of sale and at the subsequent foreclosure, a party has the authority to exercise the power of sale contained in the mortgage. 

Facts.

This case involved two cases with very similar facts. U.S. Bank National Association (“U.S. Bank”) and Wells Fargo Bank, N.A. (“Wells Fargo”) (collectively known as “Plaintiffs”) both foreclosed on a property and both purchases the property again at the foreclosure sale. Plaintiffs filed a claim requesting the court to declare them to be the fee simple owners of the foreclosed properties. U.S. Bank alleged that it was previously assigned its mortgage under a trust agreement. However, U.S. Bank did not present the trust agreement to the court. Yet, U.S. Bank did present a private placement memorandum (“PPM”), which expressed that the mortgage “will be” assigned to the trust. Additionally, Wells Fargo alleged that it was assigned its mortgage and tried to support that assertion with an unsigned copy of a pooling and servicing agreement (“PSA”) and a mortgage loans schedule,which allegedly contained the mortgage at issue. Nonetheless, the PSA only included the loan amounts, zip codes, and cities, not the property addresses, mortgagors’ names, or loan numbers. Subsequently, the trial court held against Plaintiffs, and Plaintiffs appealed.

Issue.

Whether a party has the authority to exercise the power of sale contained in the mortgage when a party hold the mortgage at the time of the notice of sale and at the subsequent foreclosure.

Held.

Yes, a party has the authority to exercise the power of sale contained in the mortgage when a party hold the mortgage at the time of the notice of sale and at the subsequent foreclosure.

Concurrence.

A mortgage holder is required to adhere to the law strictly whenever the holder is executing foreclosure sales. Plaintiffs were engaged in “utter carelessness” when they documented their assignments.

Discussion.

When a party hold the mortgage at the time of the notice of sale and at the subsequent foreclosure, a party has the authority to exercise the power of sale contained in the mortgage. A party is required to establish thatit possesses the mortgage with a writing signed by the grantor. If the party does not make the requisite showing, the foreclosure and subsequent sale are void. Because Massachusetts’s law authorizes mortgage holders to foreclose, absent any immediate judicial oversight, mortgage holders are required to strictly adhere to these rules. Here, Plaintiffs have not presented any documents to the court to explicitly illustrate that they were the holders of each mortgages at the time of the required notices of sale and at the subsequent foreclosure sales. Instead, Plaintiffs have established circumstantial evidence of assignment of the mortgages. However, the documents, which circumstantially establish the assignments of mortgages, are insufficient to establish an effective assignment. First, U.S. Bank’s PPM, at best, illustrates that the mortgage will be assigned at a later time, after the PPM’s execution. Second, Wells Fargo’s PSA and other documents were not detailed enough nor were they signed. Therefore, the trial court’s finding is affirmed, and the foreclosures sales are void.