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Maxwell v. MTGLQ Investors, L.P.

United States District Court, D. Massachusetts

February 4, 2019

KEITH JASON MAXWELL, Plaintiff,
v.
MTGLQ INVESTORS, L.P., Defendant.

          MEMORANDUM AND ORDER ON DEFENDANT'S MOTION TO DISMISS

          F. DENNIS SAYLOR IV UNITED STATES DISTRICT JUDGE

         This is an action arising from a mortgage foreclosure. Jurisdiction is based on diversity of citizenship.

         In January 2018, defendant MTGLQ Investors, L.P. foreclosed on a residential property owned by plaintiff Keith Maxwell. Maxwell seeks to void the foreclosure sale. MTGLQ moved to dismiss the complaint for failure to state a claim upon which relief can be granted. For the reasons set forth below, the motion to dismiss will be granted.

         I. Background

         A. Factual Background

         Unless otherwise noted, the facts are stated as alleged in the complaint.[1]

         On June 23, 2003, Keith Maxwell purchased a residential property in Sandwich, Massachusetts. (Compl. at 2 ¶¶ 1, 3). To finance to purchase, he obtained a mortgage loan from Arrow Mortgage Corporation, secured by the Sandwich property, in the amount of $266, 000. (Compl. at 2 ¶ 3; Def. Mem. Ex. 1).[2] Arrow concurrently assigned the mortgage to Washington Mutual Bank, FA. (Id. Ex. 2).

         On September 25, 2008, the United States Office of Thrift Supervision (“OTS”) closed Washington Mutual and appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver. (Id. Ex. 3). The FDIC then sold certain Washington Mutual assets, including its interest in the Maxwell loan, to JPMorgan Chase Bank, N.A. (Id. Ex. 4).

         On December 22, 2015, JPMorgan executed a limited power of attorney (“POA”) appointing MTGLQ Investors, L.P. as its attorney-in-fact. (Compl. at 5-6 ¶¶ 9-11; Def. Mem. Ex. 5). The limited POA was notarized and then recorded at the Barnstable County Registry of Deeds. (Compl. at 5 ¶ 11; Def. Mem. Ex. 5). Pursuant to the limited POA, MTGLQ was given the power to “execute, acknowledge, seal and deliver assignments . . . [of] mortgage[s].” (Def. Mem. Ex. 5 at ¶ 1). However, the limited POA expressly disclaimed MTGLQ's authority to “foreclose delinquent Mortgage Loans or otherwise enforce rights under such Mortgages and the related Mortgage Note in [JPMorgan]'s name.” (Id.).

         On January 22, 2016, MTGLQ, acting pursuant to the limited POA, assigned the Maxwell loan to itself. (Compl. at 4 ¶ 6; Def. Mem. Ex. 6). The assignment was notarized and then recorded in the Barnstable County Registry of Deeds. (Compl. at 4 ¶ 6, 5 ¶ 11; Def. Mem. Exs. 5-6).

         In April 2016, The Goldman Sachs Group, Inc. entered into a settlement agreement with the United States Department of Justice (“DOJ”), among others. (Def. Mem. Ex. 8). The settlement followed a DOJ investigation into “the marketing, structuring, arrangement, underwriting, issuance, and sale of residential mortgage-backed securities (‘RMBS') by Goldman Sachs.” (Id. at ¶ A). In exchange for settling the various legal claims against it, Goldman Sachs, agreed to, among other things, provide $1.8 billion in “consumer relief to remediate harms resulting from [its] alleged unlawful conduct.” (Id. at ¶ 2).

         The bulk of the settlement, $1.52 billion, was to be made available as set forth in annex 2 to the agreement. (Id.). According to the complaint, the $1.52 billion “will be paid out pursuant to an agreement with the United States that Goldman will provide loan modifications, including loan forgiveness and forbearance, to distressed and underwater homeowners throughout the country, as well as financing for affordable rental and for-sale housing throughout the country.” (Compl. at 3 n.1). The agreement further provided that it was “intended for the benefit of the Parties only and [did] not create any third-party rights.” (Def. Mem. Ex. 8 at ¶ 16).

         The complaint alleges:

On information and belief, reportedly, MTGLQ Investors, L.P. is a wholly owned subsidiary of ‘Goldman Sachs', that has been purchasing delinquent home loans from Fanny Mae, and ‘Goldman Sachs' itself began utilizing MTGLQ Investors so that it may comply with a 04/11/16 settlement with the Federal Government arising from essentially unethical loan practices under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).

(Compl. at 3 ¶ 4).

         At some point, Maxwell fell behind on his mortgage payments. (Id. at 5 ¶ 10). On January 25 or 28, 2018, MTGLQ foreclosed on the property. (Id.; Def. Mem. Ex. 7 at 1).[3] The foreclosure deed stated, among other things, that MTGLQ was “the present holder of [Maxwell's] mortgage, ” pursuant to the assignment recorded in the Barnstable County Registry of Deeds. (Compl. at 4 ¶ 6, 5 ¶ 10; Def. Mem. Ex. 7 at 1). It was accompanied by an “Affidavit of Sale Under Power of Sale in Mortgage, ” which attested that MTGLQ had complied with all publication and notice requirements prior to the foreclosure sale, including those required by Mass. Gen. Laws ch. 244, § 14. (Def. Mem. Ex. 7 at 2-3).[4]

         It appears that Maxwell continues to reside on the property, without paying the mortgage or any rent. His occupation is the subject of a summary-process action in the state housing court. (Compl. at 5 ¶ 10). The parties have represented that the summary-process matter has since been stayed pending the outcome of this case.

         B. Procedural History

         On July 31, 2018, Maxwell filed a complaint against MTGLQ in Barnstable County Superior Court seeking injunctive relief and a declaratory judgment pursuant to Mass. Gen. Laws ch. 231A, § 1. The complaint alleges that the foreclosure was unlawful on multiple grounds.[5]First, it challenges MTGLQ's right to foreclose under an assignment. Next, it contends MTGLQ was required to offer Maxwell a loan modification pursuant to the 2016 DOJ settlement, but failed to do so. Finally, it alleges that MTGLQ failed to provide pre-foreclosure notices to Maxwell as required by Mass. Gen. Laws ch. 244.

         On September 1, 2018, MTGLQ removed the action to this Court.

         MTGLQ has moved to dismiss the complaint for failure to state a claim upon which relief can be granted, contending that Maxwell lacks standing to challenge the mortgage assignment, because any alleged procedural infirmities merely render the assignment voidable, not void. It further contends that his remaining claims, which concern ...


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