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McAllister v. Countrywide Home Loans, Inc.

United States District Court, D. Massachusetts

June 16, 2016

GREGG C. MCALLISTER and NATALIE M. MCALLISTER, Plaintiffs,
v.
COUNTRYWIDE HOME LOANS, INC., BANK OF AMERICA, N.A., DITECH FINANCIAL LLC f/k/a GREEN TREE SERVICING LLC, and MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., Defendants.

          OPINION AND ORDER

          George A. O’Toole, Jr. United States District Judge.

         Pro se plaintiffs, Gregg C. McAllister and Natalie M. McAllister, seek a preliminary injunction to stop an impending foreclosure on their family home. The foreclosure sale was initially scheduled for June 9, 2016. The Court granted the plaintiffs’ request to temporarily enjoin that sale to permit fuller briefing and a hearing on the matter. Both the plaintiffs and the foreclosing entity, Ditech Financial LLC f/k/a Green Tree Servicing LLC (“Ditech”) participated at that hearing.

         For the reasons discussed below, the McAllisters’ request for a preliminary injunction is denied. Most importantly, they have failed to show a likelihood of success on the merits of their claims.

         I. Factual Background [1]

         The McAllisters refinanced their home with a loan from Countrywide Home Loans, Inc. (“Countrywide”) in the spring of 2006. That loan is identified by a note dated March 27, 2006, payable to Countrywide. (See Aff. of Stewart Derrick, Ex. 1 (dkt. no. 29-1) [hereinafter Note].) That loan was secured by a mortgage on the home, also dated March 27, 2006, and initially with Mortgage Electronic Registration Systems, Inc. (“MERS”) as the mortgagee. (See Aff. of Stewart Derrick, Ex. 2 (dkt. no. 29-2) [hereinafter Mortgage].)

         The mortgage has been assigned twice in the intervening years. MERS assigned it BAC Home Loans Servicing, LP (“BAC”) on April 21, 2011. (See Aff. of Stewart Derrick, Ex. 3 (dkt. no. 29-3).) Bank of America, N.A. (“BANA”), the successor in interest through a merger to BAC, assigned the mortgage to Green Tree Servicing LLC (“Green Tree”) on June 18, 2013. (See Aff. of Stewart Derrick, Ex. 5 (dkt. no. 29-5).) These assignments were recorded. After two other entities merged into Green Tree in August 2015, Green Tree changed its registered name in Massachusetts to “Ditech Financial LLC.” (See Aff. of Stewart Derrick, Ex. 11 (dkt. no. 29-11).)

         The path of the note is less clear in the documentary record. Ditech recorded an affidavit with the registry of deeds that states that it is “the authorized agent of the holder of said promissory note for purposes, inter alia, of foreclosing said mortgage on behalf of said note holder.” (See Aff. of Stewart Derrick, Ex. 12, at 4 (dkt. no. 29-12).) In what appears to be a letter to the McAllisters, the same employee who signed the above affidavit certified that Ditech “has the right to foreclose because it is the holder of the mortgage and the authorized agent of the owner of the Note, which is Fannie Mae.”[2] (See Aff. of Stewart Derrick, Ex. 13, at 6 (dkt. no. 29-13).) Other copies of communications between Ditech and the McAllisters suggest that Ditech is the servicer for this loan on behalf of Fannie Mae. (See, e.g., Aff. of Stewart Derrick, Ex. 9 (dkt. no. 29-9).) The copies of the note in the record show it has been stamped with a blank endorsement “without recourse” by Countrywide. (Note, at 3.)[3]

         The McAllisters describe difficulty in making their mortgage payments following the recent economic downturn. At the time, their servicer was Bank of America.[4] They state that they tried making payments on their mortgage through a forbearance agreement, but that Bank of America terminated it.

         The McAllisters do not deny that they are behind on their mortgage. A letter sent to the McAllisters in September 2014 by Ditech’s (then Green Tree’s) counsel stated that the redemption amount, including interest and other charges, was in excess of $335, 000 on their originally $242, 000 loan. (See Aff. of Stewart Derrick, Ex. 8, at 2 (dkt. no. 29-8).) Ditech represented at the hearing that it continues to pay property taxes and insurance on the property.

         On February 25, 2014, Ditech (then Green Tree) sent the McAllisters a “150 Day Right to Cure Your Mortgage Default” letter alerting the McAllisters of the possibility of loan acceleration and foreclosure. (See Aff. of Stewart Derrick, Ex. 6, at 2, 5-6 (dkt. no. 29-6).) As mentioned above, the McAllisters received a letter in September 2014 stating that their loan was being accelerated and notifying them of the redemption amount. Ditech (then Green Tree) obtained a judgment from the Massachusetts Land Court on October 21, 2014, certifying that the McAllisters were not entitled to benefits under the Servicemembers Civil Relief Act. (See Aff. of Stewart Derrick, Ex. 7, at 2 (dkt. no. 29-7).)

         The McAllisters next received a letter from Ditech on January 27, 2015, offering a potential mortgage modification. The letter states that the modification was being offered by Fannie Mae and was “designed for customers, like you, who for some reason did not meet all of the eligibility criteria for a permanent modification under the government’s Home Affordable Modification Program (HAMP), or were unable to successfully make payments under a HAMP modification or another modification.” (See Aff. of Stewart Derrick, Ex. 9, at 2 (dkt. no. 29-9).) A follow-up letter from Ditech on June 5, 2015, states that the McAllisters did not receive a permanent modification for failure to make payments under that plan. (See Aff. of Stewart Derrick, Ex. 10, at 2 (dkt. no. 29-10).) The McAllisters claim that this plan would have required their payment of a substantial percentage of their average monthly income.

         On May 10, 2016, Ditech sent the McAllisters a notice of its intent to foreclose on June 9 and of the possibility of a deficiency following the sale. (See Aff. of Stewart Derrick, Ex. 13, at 2-6 (dkt. no. 29-13).) The McAllisters filed their Complaint in this Court on May 19. The foreclosure was postponed pending the outcome of the preliminary injunction motion.

         II. Background Legal Principles

         Under Massachusetts property law, a mortgage and a note may be separated. See generally Eaton v. Fed. Nat. Mortg. Ass’n, 969 N.E.2d 1118, 1124-26 (Mass. 2012). The note represents the debt itself-the promise to pay. See id. at 1124. The mortgage, by contrast, is the legal title to the property and “serves as security for” the obligation of the note. See id. The mortgage holder’s interest is merely “technical”; the ...


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