Aragao et al v. Mortgage Electronic Registration Systems, Inc.(MERS) et al

Filing 18

Judge William G. Young: ORDER entered. MEMORANDUM AND ORDER: This Court GRANTS the Defendants' motion to dismiss, ECF No. 9, and dismisses the complaint in its entirety. SO ORDERED(Paine, Matthew)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
___________________________________
)
)
)
)
Plaintiffs,
)
)
v.
)
)
MORTGAGE ELECTRONIC REGISTRATION
)
SYSTEMS, INC., U.S. BANK, N.A.,
)
and FEDERAL HOME LOAN MORTGAGE
)
CORPORATION,
)
)
Defendants.
)
___________________________________)
MICHAEL ARAGAO and
CHANTEL ARAGAO,

CIVIL ACTION
NO. 13-12515-WGY

MEMORANDUM AND ORDER
YOUNG, D.J.

I.

May 29, 2014

INTRODUCTION
This case is a post-foreclosure challenge to the

foreclosure of a property owned by Michael and Chantel Aragao
(the “Aragaos”).

The Aragaos assert a series of claims against

Mortgage Electronic Registration Systems, Inc. (“MERS”),
Merrimack Mortgage Company, Inc. (“Merrimack”),1 U.S. Bank, N.A.
(“U.S. Bank”), and Federal Home Loan Mortgage Corporation
(“Freddie Mac”) (collectively, with MERS and U.S. Bank, the

1

Merrimack has since been dismissed without prejudice.
Stipulation Dismissal Def. Merrimack Mortg. Co., Inc. Without
Prejudice, ECF No. 13.

1

“Defendants”): (1) that the Defendants lacked the legal
authority to foreclose on the property, (2) that U.S. Bank
breached a mortgage loan modification contract, (3) that the
Defendants owed and violated a duty of good faith and fair
dealing, and (4) that the Defendants failed to comply with
certain regulatory and statutory requirements.
For the reasons set forth in this opinion, this complaint
must be DISMISSED.
A.

Procedural History

On or about July 31, 2013, the Aragaos filed suit against
the Defendants in the Massachusetts Superior Court sitting in
and for the County of Bristol.

Defs.’ Notice Removal Civ.

Action (“Notice Removal”) 1, ECF No. 1.

The Defendants received

service in early September 2013 and removed this case to the
United States District Court for the District of Massachusetts
on October 7, 2013.

Id. at 1, 3.

The Defendants filed a motion to dismiss for failure to
state a claim on October 31, 2013.

Defs. U.S. Bank, N.A.’s,

Fed. Home Loan Mortg. Corp.’s & Mortg. Elec. Registration Sys.,
Inc.’s Mot. Dismiss, With Prejudice, Pls.’ Compl., ECF No. 9;
see also Mem. Law Supp. Defs. U.S. Bank, N.A.’s, Fed. Home Loan
Mortg. Corp.’s & Mortg. Elec. Registration Sys., Inc.’s Mot.
Dismiss, With Prejudice, Pls.’ Compl. (“Defs.’ Mem.”), ECF No.
10.

The Aragaos filed an opposition on November 14, 2013.

2

Pls.’ Mem. Law Supp. Opp’n Defs., U.S. Bank, N.A., Fed. Home
Loan Mortg. Corp. & Mortg. Elec. Registration Sys., Inc.’s Mot.
Dismiss, With Prejudice, Pls.’ Compl. (“Pls.’ Opp’n”), ECF No.
14.

The Defendants replied on November 20, 2013.

Defs.’ Reply

Pls.’ Opp’n Defs. U.S. Bank, N.A.’s, Fed. Home Loan Mortg.
Corp.’s & Mortg. Elec. Registration Sys., Inc.’s Mot. Dismiss,
With Prejudice, Pls.’ Compl. (“Defs.’ Reply”), ECF No. 15.
B.

Facts Alleged

On February 21, 2007, the Aragaos executed a mortgage
agreement, accompanied by an associated note, for a property
located in Fall River, Massachusetts (the “Property”).

See

Notice Removal, Ex. A., Compl. ¶ 9, ECF No. 1-1; Aff. Jennifer
Mikels Supp. Defs. U.S. Bank, N.A.’s, Fed. Home Loan Mortg.
Corp.’s & Mortg. Elec. Registration Sys., Inc.’s Mot. Dismiss,
With Prejudice, Pls.’ Compl. (“Mikels Aff.”), Ex. A, Note, ECF
No. 11-1; Mikels Aff., Ex. B, Mortgage (“Mortg.”), ECF No. 11-2.
The mortgage identified the Aragaos as the borrowers, Merrimack
as the lender, and MERS as the mortgagee, “acting solely as a
nominee for Lender and Lender’s successors and assigns.”

Mortg.

1.
At some point between 2007 and 2011, the Aragaos fell
behind in their payments, and in June 2011, they “engaged [U.S.]
Bank for a mortgage loan modification to avoid foreclosure on
their property.”

Compl. ¶ 24.

One month later, on July 7,

3

2011, U.S. Bank, which by this point had assumed responsibility
for debt collection, issued a formal written notice to the
Aragaos stating that they were in breach of the mortgage
agreement and had 150 days to cure their default.

Mikels Aff.,

Ex. C, U.S. Bank Letter (“150-Day Letter”) 1, ECF No. 11-3.

The

Aragaos and U.S. Bank continued mortgage modification
discussions for the next ten months, but “[o]n or about May 7,
2012, [U.S.] Bank informed Plaintiffs that their request for a
mortgage modification to avoid foreclosure was denied.”
¶ 27.

Compl.

U.S. Bank’s stated reason for denial allegedly was that

the Aragaos had failed to submit requested documents.

Id.

The

Aragaos, however, allege that had supplied all required
documentation during a previous loss mitigation review.

Id. ¶

28.
Concurrent with the loan modification process, the note and
mortgage changed hands.

At some point –- the record is unclear

as to the date –- Merrimack assigned the note to U.S. Bank.
Note 4.

See

On May 22, 2012, U.S. Bank directed MERS to assign the

mortgage to U.S. Bank.2

See Mikels Aff., Ex. D, Assignment, ECF

2

The Aragaos’ complaint avers that “[MERS] allegedly
assigned the note to [U.S.] Bank.” Compl. ¶ 13. This is a
legal impossibility. MERS is nothing more than a nominee trust
and cannot assign anything except at the express direction of
the note holder. See Culhane v. Aurora Loan Servs. of Neb., 826
F. Supp. 2d 352, 370 (D. Mass. 2011), aff’d, 708 F.3d 282 (1st
Cir. 2013); see also id. at 373-75 (discussing how employees of
the note holder are “deputized” as MERS’s agents for the
4

No. 11-4; see also Compl. ¶ 13.

Then, on December 4, 2012, U.S.

Bank entered the Property for the purposes of “foreclosing the
Aragaos’s mortgage.
No. 11-5.

Mikels Aff., Ex. E, Certificate Entry, ECF

Finally, on June 20, 2013, the mortgage was conveyed

to Freddie Mac.

Mikels Aff., Ex. F, Foreclosure Deed, ECF No.

11-6; Compl. ¶ 32.
II.

ANALYSIS
A.

Standard of Review

Federal Rule of Civil Procedure (“Rule”) 12(b)(6) requires
a court to dismiss a complaint if it “fail[s] to state a claim
upon which relief can be granted.”

Fed. R. Civ. P. 12(b)(6);

see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007).
In making this determination, the First Circuit sets out a
three-step inquiry.

“First, ‘the court must separate the

complaint’s factual allegations (which must be accepted as true)
from its conclusory legal allegations (which need not be
credited).’”

Grajales v. P.R. Ports Auth., 682 F.3d 40, 45 (1st

Cir. 2012) (quoting Morales-Cruz v. Univ. of P.R., 676 F.3d 220,
224 (1st Cir. 2012)).

Second, the court must “accept the truth

of all well-pleaded facts and draw all reasonable inferences
purposes of transferring the mortgage); Laura A. Steven, Note,
MERS and the Mortgage Crisis: Obfuscating Loan Ownership and the
Need for Clarity, 7 Brook. J. Corp. Fin. & Com. L. 251, 255
(2012) (discussing MERS’s nominee status). As the Mikels
Affidavit implies, an agent of U.S. Bank simply assigned the
mortgage to itself. Cf. Mikels Aff., Ex. D., Assignment, ECF
No. 11-4.
5

therefrom in the pleader’s favor.”

Id. at 44.

By itself, this

step is not enough to survive a motion to dismiss, as “the
complaint must contain sufficient factual matter to state a
claim to relief that is plausible on its face.”

Id. at 44

(quoting Katz v. Pershing, LLC, 672 F.3d 64, 72-73 (1st Cir.
2012)).

Thus, the court finally must determine whether the

facts pled permit a “reasonable inference,” defined as one that
is “plausible, not . . . merely conceivable,” that the defendant
is liable.

Id. (quoting Sepúlveda-Villarini v. Dep’t of Educ.

of P.R., 628 F.3d 25, 29 (1st Cir. 2010)); see also Sec. & Exch.
Comm. v. Tambone, 597 F.3d 436, 442 (1st Cir. 2010) (en banc)
(“If the factual allegations in the complaint are too meager,
vague, or conclusory to remove the possibility of relief from
the realm of mere conjecture, the complaint is open to
dismissal.”).
In evaluating a motion to dismiss, “[o]rdinarily . . . any
consideration of documents not attached to the complaint, or not
expressly incorporated therein, is forbidden.”
Page, 987 F.2d 1, 3 (1st Cir. 1993).

Watterson v.

There are exceptions,

however, “for documents the authenticity of which are not
disputed by the parties; for official public records; for
documents central to plaintiffs’ claim; or for documents
sufficiently referred to in the complaint,” even if those
documents are introduced by the defendant.

6

Id. at 3-4.

B.

Count One: Declaratory Judgment That the Defendants
Lack Legal Authority to Foreclose

The Aragaos’ first claim is that the Defendants lack the
legal authority required to foreclose, and thus that the
foreclosure should be declared void.

While the Aragaos’

complaint is not a model of clarity, it appears to allege that
because Merrimack purportedly was the only party with authority
to assign the Aragaos’ mortgage and note, Compl. ¶ 37, MERS and
U.S. Bank lacked the requisite standing and legal authority to
foreclose on the Property, id. ¶¶ 38-39.

The Aragaos contend

that therefore, no party -- including Freddie Mac -- has any
legal interest in the property. Id. ¶¶ 40-41.

The complaint,

however, fails to meet the requisite pleading standard required
for factual specificity, and thus is dismissed for failure to
comply with the requirements set out by Twombly, 550 U.S. 544,
as interpreted by the First Circuit.
Significantly, the complaint is nearly devoid of factual
pleadings relevant to this count.

Of the twenty-six paragraphs

listed in the fact section, only seven include factual claims,
with another five including mixed statements of law and fact.
The remaining fourteen paragraphs are statements of law which
cannot be considered at this stage.3

3

Of the factual or mixed

For more information on how these paragraphs were
categorized, see Appendix 1.

7

claims that can be considered, only two mixed statements of law
and fact are relevant to this count.

The first, paragraph 11,

states that only the Lender, Merrimack, had the power to
accelerate the terms of the Aragaos’ note and invoke the
statutory power of sale.

Compl. ¶ 11.

The second, paragraph

13, states that the mortgage, but not the note, was assigned by
U.S. Bank to itself on May 22, 2012.4

See id. ¶ 13.

Even assuming that these mixed statements may be considered
at the motion to dismiss stage, neither provides the Aragaos
support.

The first allegation, in paragraph 11, implies that

another party, such as U.S. Bank, cannot invoke foreclosure
proceedings.

These claims, however, are not supported by the

underlying mortgage document.

To be sure, the mortgage states

that the “Lender. . . may invoke the STATUTORY POWER OF SALE and
any other remedies permitted by Applicable Law.”

Mortg. ¶ 22.

But the mortgage also says that “[t]he Note or a partial
interest in the Note (together with this Security Instrument)
can be sold one or more times without prior notice to Borrower.”
Id. ¶ 20.

Reading these provisions so that “every word is given

effect,” DeWolfe v. Hingham Ctr., Ltd., 464 Mass. 795, 804
4

Because the Aragaos do not argue this point, the Court
assumes that, at the time it assigned the mortgage to itself,
U.S. Bank already held the related note by assignment from
Merrimack. If it did not, of course, it had no authority to
assign the mortgage to itself. See Culhane, 826 F. Supp. 2d at
372-73 (stating that a mortgage can only be assigned at the
direction of the note holder).
8

(2013) (citing Hagerty v. Myers, 333 Mass. 387, 388 (1955)), as
this Court must, leads to a conclusion that the current owner of
the mortgage and note is the only party that can foreclose, but
that both the mortgage deed and underlying note are
transferable.

Such a reading comports with how Massachusetts

courts have analyzed issues relating to the transferability of
mortgages.

See, e.g., U.S. Bank Nat’l Ass’n v. Ibanez, 458

Mass. 637, 649-50 (2011) (acknowledging that mortgages and notes
can be transferred).

Thus, the Aragaos’ claim that only

Merrimack could invoke the statutory power of sale, rather than
the current owner, fails as matter of law.
The Aragaos’ second relevant factual allegation is found in
paragraph 13, stating that “[MERS] allegedly assigned the
mortgage to [U.S.] Bank.”

Compl. ¶ 13.

They further add the

conclusion of law that “[t]his alleged assignment failed to
assign the required ‘note’ as prescribed under Massachusetts
law.”

Id.

As the Defendants properly state, however, a

mortgage can be split from its underlying note, so long as the
two are held by the same foreclosing party at the time of
foreclosure.

Defs.’ Mem. 6-7; see Eaton v. Fed. Nat’l Mortg.

Ass’n, 462 Mass. 569, 571 (2012) (holding that a mortgagee
eligible to exercise the statutory power of sale is a “person or
entity then holding the mortgage and also either holding the
mortgage note or acting on behalf of the note holder”).

9

The key

inquiry, then, is whether U.S. Bank held both the note and the
mortgage at the time of foreclosure, and the Aragaos do not
allege otherwise.

That the bank did not hold both before the

foreclosure date is of no legal consequence.
Stated simply, then, the Aragaos have not viably alleged
that the Defendants have violated any law warranting any form of
declaratory judgment by this Court.

Thus, given the limited

pleading, this Court GRANTS the motion to dismiss as to Count
One.
C.

Count Two: Breach of Contract

The Aragaos’ second claim is that U.S. Bank entered into,
and then breached, a mortgage loan modification agreement with
them.5

See Compl. ¶¶ 47-49.

The question for the Court is

whether such an agreement was created.6

5

The Aragaos also alleged that Merrimack breached its duty
under the terms of the mortgage agreement. Compl. ¶¶ 43-46.
Because Merrimack has been dismissed from this action, however,
such allegations are moot for the purposes of this motion.
6

Although there is no allegation of a written agreement,
because the alleged contract concerns a modification to the
mortgage payment terms, rather than to the underlying interest
in the land, the Massachusetts statute of frauds does not bar
this Court from considering the existence and potential breach
of a non-written contract. See Akar v. Fed. Nat’l Mortg. Ass’n,
845 F. Supp. 2d 381, 397 (D. Mass. 2012) (Gorton, J.) (“[A]n
oral modification which does not rewrite the contract, but
merely alters the timing or mode of performance of the contract,
is enforceable under Massachusetts law”); id. (“[W]here ‘[t]he
oral agreement merely changed the method by which the plaintiffs
had undertaken to pay their mortgage indebtedness[,]’ but did
not affect the mortgagee’s ‘right, title and interest’ in the
10

Under Massachusetts law, the essential elements of a
contract are “offer, acceptance, and an exchange of
consideration or meeting of minds.”
Mass. App. Ct. 362, 367 (2005).

Northrup v. Brigham, 63

In order to satisfy the

pleading standards demanded by a motion to dismiss, a claim of
breach of contract must plead all of these requisite contract
elements.

See Persson v. Scotia Prince Cruises, Ltd., 330 F.3d

28, 34 (1st Cir. 2003) (“A breach of contract complaint must
allege (1) the existence of a valid and binding contract; (2)
that plaintiff has complied with the contract and performed his
own obligations under it; and (3) breach of the contract causing
damages.”) (citing 5 Charles Alan Wright & Arthur R. Miller,
Federal Practice & Procedure § 1235, at 268-70 (2d ed. 2002));
see also Emrit v. Universal Music Grp., Inc., No. 13-181-ML,
2013 WL 3730423, at *2 (D.R.I. July 12, 2013) (dismissing
complaint because it was “absent any allegation concerning the
existence of a contract”); MMB Dev. Grp., Ltd. v. Westernbank
P.R., 762 F. Supp. 2d 356, 368 (D.P.R. 2010) (concluding that
allegations of offer and acceptance, coupled with consideration,
are sufficient to deny motion to dismiss); Pearce v. Duchesneau
Grp., Inc., 392 F. Supp. 2d 63, 68 (D. Mass. 2005) (Gertner, J.)
(holding that allegations that defendant offered and agreed to
mortgage, the agreement was not unenforceable under the Statute
of Frauds.”) (second and third alteration in original) (quoting
Siegel v. Knott, 316 Mass. 526, 528-29 (1944)).

11

provide financial services to plaintiff, for a fee, are
sufficient to allege the existence of a contract).
The Aragaos’ complaint does not cross this threshold.

The

complaint offers four factual allegations relevant to the
potential formation and then alleged breach of a renegotiation
contract between the mortgagors and U.S. Bank.7

The first

allegation states that the Aragaos “engaged [U.S.] Bank for a
mortgage loan modification,” Compl. ¶ 24, and the second states
that the Aragaos “faithfully complied with the demands of [U.S.]
Bank pursuant to their loss mitigation foreclosure alternative
request,” id. ¶ 25.

The complaint then avers that “[U.S.] Bank

informed Plaintiffs that their request for a mortgage
modification to avoid foreclosure was denied,” id. ¶ 27, even
though the Aragaos “provided [U.S.] Bank with all the documents
that it requested,” id. ¶ 28.

Taken together, and drawing all

inferences in favor of the non-moving plaintiff, these
allegations support a conclusion that the Aragaos made an offer
to modify the mortgage to avoid foreclosure, but not a
conclusion that U.S. Bank accepted that offer, much less for
consideration.

Indeed, the Aragaos explicitly state that “their

request for a mortgage modification . . . was denied.”
7

Id. ¶

The Complaint also alleges that “[U.S.] Bank entered into
a mortgage loan modification agreement with Plaintiffs.” Compl.
¶ 47. Insomuch as this states that a contract has been created,
however, it is a conclusion of law, and cannot be credited at
the motion to dismiss stage.
12

27.

Thus, because the Aragaos have not pled the required

elements of a contract, their claim for a breach of that
contract cannot lie.8
D.

This Court thus DISMISSES Count Two.

Count Three: Breach of Duty of Good Faith and Fair
Dealing

The Aragaos’ third claim is that the Defendants owed them a
an duty of good faith and fair dealing, and failed to act in
accordance with this obligation.

Compl. ¶¶ 51-53.

Under

Massachusetts law, “[e]very contract implies good faith and fair
dealing between the parties to it.”

T.W. Nickerson, Inc. v.

Fleet Nat’l Bank, 456 Mass. 562, 569-70 (2010) (quoting
Anthony’s Pier Four, Inc. v. HBC Assocs., 411 Mass. 451, 471
(1991)).

Such an obligation means that “neither party shall do

anything that will have the effect of destroying or injuring the
right of the other party to the fruits of the contract.”
570 (quoting Anthony’s Pier Four, 411 Mass. at 471-72).

Id. at
With

respect to mortgages, this requires, inter alia, that the
“mortgagee in exercising a power of sale in a mortgage must act
in good faith and must use reasonable diligence to protect the
interests of the mortgagor.”

Seppala & Aho Const. Co. v.

8

While not at issue in this case, commentators have
suggested that there may be a right to enforce contract mortgage
modification agreements entered into under the federal Home
Affordable Modification Program. See generally Arsen
Sarapinian, Note, Fighting Foreclosure: Using Contract Law to
Enforce the Home Affordable Modification Program (HAMP), 64
Hastings L.J. 905 (2013).
13

Petersen, 373 Mass. 316, 320 (1977) (quoting West Roxbury Co-op.
Bank v. Bowser, 324 Mass. 489, 492 (1949)).
Courts have cabined this obligation, however, and it “may
not be ‘invoked to create rights and duties not otherwise
provided for in the existing contractual relationship.’” Ayash
v. Dana-Farber Cancer Inst., 443 Mass. 367, 385 (2005) (quoting
Uno Restaurants, Inc. v. Boston Kenmore Realty Corp., 441 Mass.
376, 385 (2004)).

In the mortgage context, absent specific

contractual language creating such rights, this means that
courts will not use the duty of good faith to imply modification
or negotiation obligations on the part of the mortgagee,
especially after default.9

See Adamson v. Mortgage Elec.

Registration Sys., Inc., 29 Mass. L. Rptr. 33, at *4 (Mass.
Super. Ct. 2011) (Brassard, J.); see also FAMM Steel, Inc. v.
Sovereign Bank, 571 F.3d 93, 100-01 (1st Cir. 2009) (holding
that a creditor did not violate the obligation of good faith by
refusing to modify a defaulted loan, relying on the absence of

9

The First Circuit has recently reaffirmed this analysis.
In MacKenzie v. Flagstar Bank, FSB, 738 F.3d 486 (1st Cir.
2013), it endorsed the observation that “[u]nder Massachusetts
case law, absent an explicit provision in the mortgage contract,
there is no duty to negotiate for a loan modification once a
mortgagor defaults.” Id. at 493 (quoting Peterson v. GMAC
Mortg., LLC, No. 11-11115, 2011 WL 5075613, at *6 (D. Mass. Oct.
25, 2011) (Zobel, J.). The First Circuit concluded from this
that “[i]t would therefore be an error to extend the implied
covenant to encompass a duty to modify . . . the loan prior to
foreclosure, where no such obligation exists in the mortgage.”
Id.
14

obligations in the loan agreements and noting that “[w]hen the
borrower is in default, that necessarily alters the contours of
the covenant of good faith and fair dealing”); Lohnes v. Level 3
Commc’ns, Inc., 272 F.3d 49, 62 (1st Cir. 2001) (“[I]n the
absence of an agreement to do particular acts, Massachusetts law
imposed no obligation on the [lender] to take the affirmative
steps that would have benefited the borrower.”) (internal
quotation marks omitted);

Federal Deposit Ins. Corp. v.

LeBlanc, 85 F.3d 815, 822 (1st Cir. 1996) (“The FDIC had no duty
at all under the loan agreement to extend appellant an easement,
let alone to provide him one on terms which were more favorable
to him.

Nothing prevents a party to a bargain from engaging in

hard-nosed dealings. . . .”); Souza v. Bank of Am., Nat’l Ass’n,
No. 1:13-cv-10181-PBS, 2013 WL 3457185, at *5 (D. Mass. July 8,
2013) (Saris, C.J.) (concluding that the failure to offer a loan
modification was not a violation of the duty of good faith).
In the instant case, the Aragaos do not point to any
specific contractual provisions in either the mortgage deed or
the note requiring the mortgagee or lender to undertake any loan
modification programs at any time before foreclosure.

Nor does

an independent examination of these documents reveal such a
provision.

See generally Note; Mortg.

Thus, given that the

duty of good faith and fair dealing only applies to existing
contractual obligations, and especially considering the fact

15

that the mortgage was in default before any modification
discussions were undertaken, see FAMM Steel, Inc., 571 F.3d at
100-01, and because no such contractual obligations required
pre-foreclosure negotiation, this Court DISMISSES Count Three.
E.

Count Four: 209 Mass. Code Regs. 56.00

In their fourth count, the Aragaos allege that their
mortgage is subject to regulatory requirements under [209
Massachusetts Code Regulations 56.00 (“Regulation 56.00”)], and
that U.S. Bank failed to comply with these regulations. Compl.
¶¶ 58-59.

In response, the Defendants argue that the relevant

regulation was not issued until March 2, 2012, eight months
after the 150-Day Letter was sent, and that they cannot be
charged with violating a regulation not yet in existence.
Defs.’ Mem. 11.
The Defendants are correct that Regulation 56.00 went into
effect on March 2, 2012, having been proposed six months earlier
on September 2, 2011.10

Moreover, while legislation and

regulation passed within the Commonwealth can under certain
circumstances have retroactive effect, the presumption against
retroactivity requires a “clear indication of legislative
intent” before such a construction can be adopted.

Smith v.

Mass. Bay Transp. Auth., 462 Mass. 370, 377-78 (2012).
10

Here,

See “Regulation Tracking” section of WestlawNext, with a
search term of “209 CMR 56,” and the “Issue Date” function of
LexisNexis’s “Massachusetts Register” database.
16

there is no indication that the provisions were intended to be
retroactive.

Thus, because the 150-Day Letter was sent before

Section 56 was issued (or even proposed), the Defendants cannot
be held liable for noncompliance with a regulation that did not
exist, and Count Four is DISMISSED.
F.

Count Five: Massachusetts General Laws Chapter 244,
Section 35A

Finally, the Aragaos allege that “[U.S.] Bank violated
[Massachusetts General Laws chapter 244, section 35A (“Section
35A”)] by denying Plaintiffs a good-faith opportunity to avoid
foreclosure of their home,” and by “failing to comply with the
prescribed mandates” of the statute.

Compl. ¶ 63.

This charge

fails.
Section 35A provides several rights to a mortgagor in the
context of a threatened foreclosure.

First, “[t]he mortgagee,

or anyone holding thereunder, shall not accelerate maturity of
the unpaid balance of such mortgage obligation or otherwise
enforce the mortgage . . . until at least 150 days after the
date a written notice is given by the mortgagee to the
mortgagor.”

Mass. Gen. Laws ch. 244, § 35A(g).

During this

time, the mortgagor has a “150-day right to cure a default.”
Id. § 35A(b).

If the mortgagee wishes to foreclose before the

expiration of the 150-day period, it may do so if, among other
requirements, it certifies that “it has engaged in a good faith

17

effort to negotiate a commercially reasonable alternative to
foreclosure,” as defined by the statute.

Id. § 35A(b)(i).

Critically, however, if the creditor does not wish to foreclose
within 150 days of issuing the notice of default, it is under no
obligation to engage in any negotiations with the mortgagor.
See Barash v. CitiMortgage, Inc., 84 Mass. App. Ct. 1107, at *2
(2013) (“[B]ecause [mortgagee] did not seek to shorten the 150day period, the statute did not obligate it to engage in a good
faith effort to negotiate a commercially reasonable alternative
to foreclosure.”) (internal quotation marks omitted); Dragone v.
PNC Bank, Nat’l Ass’n, No. 11-12194-RWZ, 2013 WL 2460565, at *3
(D. Mass. June 7, 2013) (Zobel, J.) (“[Section 35A] does not
broadly require that all mortgagees must try to negotiate a
commercially reasonable alternative to foreclosure.

Instead, it

only imposes that requirement on mortgagees who seek to
foreclose within 150 days after issuing a notice of default.”).
Here, U.S. Bank sent a right to cure notice to the Aragaos
on July 7, 2011, and the Property was foreclosed upon on
December 4, 2012.

150-Day Letter; Certificate of Entry.

This

nearly seventeen-month gap far exceeds the 150-day statutory
requirement.

U.S. Bank was under no obligation to negotiate,

and the Aragaos’ allegations that the bank did not negotiate in
good faith must fail.

18

The only possible argument the Aragaos could fall back on - which they raise obliquely in their opposition to the motion
to dismiss, though not in their complaint, see Pls.’ Opp’n 8-11
-- is that the 150-Day Letter failed to comply with ten
statutory requirements set out in Section 35A(h).
Gen. Laws ch. 244, § 35A(h)(1)–(10).

See Mass.

Assuming this argument was

properly raised, it fails nevertheless.

As shown in more depth

in Appendix 2 to this opinion, the text of U.S. Bank’s 150-Day
Letter fully complies with the enumerated requirements of
Section 35A(h).

Thus, because the properly formatted right-to-

cure letter was sent in July 2011, and because the Property was
not foreclosed upon until December 2012, U.S. Bank had no
obligation to negotiate with the Aragaos and was in compliance
with Section 35A.

As a result, Count Five is DISMISSED.11

III. CONCLUSION
For the aforementioned reasons, this Court GRANTS the
Defendants’ motion to dismiss, ECF No. 9, and dismisses the
complaint in its entirety.
11

Even if U.S. Bank had not complied with Section 35A’s
notice requirements, the foreclosure would still be valid.
After briefing in this case was submitted, the Supreme Judicial
Court held in United States Bank National Association v.
Schumacher, 467 Mass. 421 (2014), that because Section 35A’s
right to cure provisions do not “relate to the foreclosure of
mortgages by the exercise of a power of sale,” id. at 431
(quoting Mass. Gen. Laws ch. 183, § 21), any failure on the part
of the mortgagee to comply strictly with that law’s mandates
does not “render[] a foreclosure void,” id. at 422.

19

SO ORDERED.

/s/ William G. Young
WILLIAM G. YOUNG
DISTRICT JUDGE

20

IV. APPENDICES
A.

Appendix 1: Complaint Factual and Legal Allegations

Complaint Paragraph

Type

9. On or about February 21, 2007, Plaintiffs
entered into an alleged mortgage agreement,
which identified Mers as the mortgagee and
solely as nominee for Lender.
10. The alleged mortgage agreement named
Merrimack as the Lender.

Fact

11. The alleged mortgage only gave Lender the
legal power to accelerate the terms thereunder.
The Lender had an affirmative duty to give
Plaintiffs notice regarding any default and
action required to cure any default. Under the
alleged mortgage, Lender was the only party with
legal authority to invoke the Statutory Power of
Sale.
12. Lender in this matter never provided
Plaintiffs with the required notices under the
terms of the alleged mortgage. Merrimack failed
to comply with the terms and conditions under
the alleged mortgage.
13. On or about May 22, 2012, an alleged
assignment of mortgage concerning Plaintiffs'
property was executed by Mers. In this alleged
assignment of mortgage, Mers allegedly assigned
the mortgage to US Bank. This alleged
assignment failed to assign the required "note"
as prescribed under Massachusetts law.
14. Mers did not convey a valid, legal interest
in Plaintiffs' property, as prescribed under
Massachusetts law.
15. US Bank failed to hold, at all times
relevant in this matter, any valid, legal
interest in Plaintiffs' property. US Bank never
had legal authority and standing in Plaintiffs'
property.
16. The alleged assignment of mortgage in this
matter is void, as a matter of law.

Mixed

17. This alleged assignment of mortgage lacks
the required legal authority and standing in
Plaintiffs' property. This alleged assignment

21

Fact

Mixed (facts
underlined)

Mixed (facts
underlined)

Law

Law

Law
Law

of mortgage fails to give US Bank valid legal
authority and standing in Plaintiffs' property
to foreclose and/or evict thereon.
18. Mers failed to validly assign the legal
interest in Plaintiffs' property to foreclose
and/or evict Plaintiffs.
19. Defendants lack the required legal capacity
and standing to have any legal effect concerning
Plaintiffs' property.
20. Defendants lack the legal authority and
standing in Plaintiffs' property to lawfully
make assignments concerning Plaintiffs’
property.
21. Defendants lack the required legal authority
and standing in Plaintiffs' property to
foreclose and/or evict Plaintiffs from their
home.
22. US Bank lacks legal authority and standing
in Plaintiffs' property to issue a valid Order
of Notice to foreclose on Plaintiffs' property.
23. The alleged assignment of mortgage in this
matter is void. The alleged assignment of
mortgage in this matter has no legal effect
concerning Plaintiffs' property.
24. In or about June 2011, while under the
alleged mortgage, Plaintiffs engaged US Bank for
a mortgage loan modification to avoid
foreclosure on their property.
25. During this time period, Plaintiffs
faithfully complied with the demands of US Bank
pursuant to their loss mitigation foreclosure
alternative request.
26. Plaintiffs, at all times relevant in this
matter, acted in good-faith and fair-dealings
with US Bank.
27. On or about May 7, 2012, US Bank informed
Plaintiffs that their request for a mortgage
modification to avoid foreclosure was denied.
US Bank's stated reason for declining
Plaintiffs' modification request was allegedly
that Plaintiffs' failed to submit requested
documents to US Bank.
28. Plaintiffs did not fail to submit requested
documents to US Bank. Plaintiffs provided US
Bank with all the documents that it requested,
during the loss mitigation foreclosure review.

22

Law

Law

Law

Law

Law

Law

Fact

Fact

Mixed

Fact

Fact

29. US Bank intentionally and unreasonably
repeatedly requested Plaintiffs to submit the
same documents during the loss mitigation
foreclosure review of their mortgage loan
modification request.
30. US Bank acted in bad-faith and fair-dealings
when it unfairly, unreasonably and without good
cause denied Plaintiffs for a mortgage loan
modification to avoid foreclosure on Plaintiffs'
property.
31. Plaintiffs have been and continue to be
damaged by Defendants' conduct and actions in
this matter.
32. On or about June 20, 2013, US Bank allegedly
assigned a foreclosure deed to FHLMC.

Mixed (law
underlined)

33. This foreclosure deed is void. US Bank
lacked the legal authority and standing in
Plaintiffs' property to validly assign the
required legal interest in Plaintiffs' property
to foreclose.
34. FHLMC lacks the legal authority and standing
in Plaintiffs' property to foreclose or evict
Plaintiffs from their home.

Law

23

Law

Law

Fact

Law

B.

Appendix 2: 150-Day Letter Statutory Requirements

Statutory Requirement12
(1) the nature of the default
claimed on such mortgage of
residential real property and
of the mortgagor's right to
cure the default by paying the
sum of money required to cure
the default;

(2) the date by which the
mortgagor shall cure the
default to avoid acceleration,
a foreclosure or other action
to seize the home, which date
shall not be less than 150 days
after service of the notice and
the name, address and local or
toll free telephone number of a
person to whom the payment or
tender shall be made unless a
creditor chooses to begin
foreclosure proceedings after a
right to cure period lasting
less than 150 days that engaged
in a good faith effort to
negotiate and agree upon a
commercially reasonable
alternative but was not
successful in resolving the
dispute, in which case a
foreclosure or other action to
seize the home may take place
on an earlier date to be
specified;
(3) that, if the mortgagor does
not cure the default by the
date specified, the mortgagee,
or anyone holding thereunder,
may take steps to terminate the
mortgagor's ownership in the
property by a foreclosure
12

U.S. Bank Letter Text
“You are in breach of the
mortgage due to the failure to
pay the monthly installments
due thereunder. You have the
right to cure the default and
redeem the property through
payment of the full amount
that is past due prior to a
foreclosure sale.” (p. 1)
“You have (150) days from the
date of this letter [July 7,
2011] to cure the default.”
(p. 1)
. . .
“Remit payments to:
U.S. Bank Home Mortgage
P.O. Box 2005
Owensboro, KY 42304
Toll Free Phone: [phone].” (p. 2)

“If you fail to bring this
account current within 150
days, the full balance of the
loan will be accelerated and
the current holder of the
mortgage may take steps to
terminate your rights to the

Mass. Gen. Laws ch. 244, § 35A(h)

24

proceeding or other action to
seize the home;

(4) the name and address of the
mortgagee, or anyone holding
thereunder, and the telephone
number of a representative of
the mortgagee whom the
mortgagor may contact if the
mortgagor disagrees with the
mortgagee's assertion that a
default has occurred or the
correctness of the mortgagee's
calculation of the amount
required to cure the default;
(5) the name of any current and
former mortgage broker or
mortgage loan originator for
such mortgage or note securing
the residential property;
(6) that the mortgagor may be
eligible for assistance from
the Homeownership Preservation
Foundation or other foreclosure
counseling agency, and the
local or toll free telephone
numbers the mortgagor may call
to request this assistance;

(7) that the mortgagor may sell
the property prior to the
foreclosure sale and use the
proceeds to pay off the
mortgage;
(8) that the mortgagor may
redeem the property by paying
the total amount due, prior to
the foreclosure sale;

(9) that the mortgagor may be
evicted from the home after a
foreclosure sale; and

25

property by foreclosure or
other action to seize the
property. You may be evicted
from the home after a
foreclosure sale.” (p. 1)
“The current name and address
of the mortgage holder is US
Bank NA, 4801 Frederica St.
Owensboro KY 42301. If you
disagree with the assertion
that you are in default or
disagree with the amount past
due, you may contact Mary
Midkiff toll free at 1-800365-7900.” (p. 1)

“Current or former mortgage
broker or loan originator, if
applicable: Merrimack Mortgage
Co.” (p. 1)
“You may be eligible for
assistance from the
Massachusetts Housing Finance
Agency. The Division of Banks
has set up a hope hotline at
888-995-4673 for assistance.”
(p. 2)
[NB: This is the number of the
Homeownership Preservation
Foundation]
“You have the right to sell
the property prior to the
foreclosure sale and use the
proceeds to payoff the
mortgage.” (p. 2)
“You have the right to cure
the default and redeem the
property through payment of
the full amount that is past
due prior to a foreclosure
sale.” (p. 1)
“You may be evicted from the
home after a foreclosure
sale.” (p. 1)

(10) the mortgagor may have the
following additional rights,
depending on the terms of the
residential mortgage: (i) to
refinance the obligation by
obtaining a loan which would
fully repay the residential
mortgage debtor; and (ii) to
voluntarily grant a deed to the
residential mortgage lender in
lieu of foreclosure.
(10 cont’d) The notice shall
also include a declaration, in
the language the creditor has
regularly used in its
communication with the
borrower, appearing on the
first page of the notice
stating: “This is an important
notice concerning your right to
live in your home. Have it
translated at once.”

26

“You may also have the right
to refinance the obligation by
obtaining a loan which would
fully repay the residential
mortgage debt and/or the right
to voluntarily grant a deed to
the residential mortgage
lender in lieu of foreclosure,
depending on the terms of the
residential mortgage.” (p. 2)
“**This is an important notice
concerning your right to live
in your home. Please have it
translated at once.**” (p. 1)