## Facts

- U.S. Bank National Association and Wells Fargo Bank, N.A., each acting as trustee for securitized mortgage trusts, foreclosed by statutory power of sale on two Massachusetts properties and purchased the properties at their own foreclosure sales (July 5, 2007).
- After the sales, each bank filed an action in the Massachusetts Land Court to quiet title and obtain declarations that the mortgagors’ interests were extinguished and that each bank held clear fee simple title.
- Each bank’s pleadings and evidence showed that formal assignments into the banks’ names as trustees were executed and/or recorded only after publication of the foreclosure notices and after the foreclosure sales.
- When the Land Court evaluated motions for default judgment, it required proof that each plaintiff was the mortgage holder at the time of notice and sale and concluded the plaintiffs were not; it entered judgments denying the requested declarations.
- On motions to vacate, the banks submitted securitization documents (including a private placement memorandum and a pooling and servicing agreement with an incomplete loan schedule) to argue the mortgages had been transferred earlier, but the Land Court found the materials insufficient.
- The Supreme Judicial Court granted direct appellate review of the consolidated appeals and reviewed whether the plaintiffs proved authority to foreclose and entitlement to quiet-title relief.

## Issues

1. Whether a party conducting a nonjudicial foreclosure by power of sale must prove it held the mortgage at the time it published the notice of sale and at the time it conducted the foreclosure sale.
2. Whether securitization-related documents, without a timely executed written assignment identifying the specific mortgage, can establish that the foreclosing trustee held the mortgage at the relevant times.
3. Whether a post-foreclosure assignment can retroactively validate a foreclosure sale conducted by a party that lacked authority when notice was given and the sale occurred.

## Decision

- The Supreme Judicial Court affirmed the Land Court judgments for the mortgagors.
- The court held that neither U.S. Bank nor Wells Fargo proved it was the holder of the mortgage when it published notice and conducted the foreclosure sale.
- Because the plaintiffs lacked authority to exercise the statutory power of sale at the relevant times, the foreclosure sales were invalid to convey title.
- The court rejected reliance on forward-looking or non-specific securitization materials that did not demonstrate an actual, completed assignment of the particular mortgages before foreclosure.
- The court held that later-executed or later-recorded assignments could not cure the lack of authority at the time of notice and sale.
- The plaintiffs therefore failed to establish entitlement to declarations that they held clear fee simple title.

## Legal Principles

- A nonjudicial foreclosure by power of sale requires strict compliance with the governing statutes and the mortgage’s power-of-sale terms.
- Only the mortgagee, or a valid assignee standing in the mortgagee’s position, may exercise the statutory power of sale; the foreclosing party must hold the mortgage when notice is given and when the sale is conducted.
- A foreclosing party must be able to demonstrate mortgage-holder status through a valid written assignment executed before the foreclosure, not merely through generalized or incomplete securitization documents.
- An assignment executed or recorded after the foreclosure does not retroactively authorize the foreclosure or validate the resulting sale.
- The invalidity of a foreclosure based on lack of authority does not depend on a showing of borrower prejudice.

## Conclusion

Massachusetts requires a foreclosing party in a power-of-sale foreclosure to prove it held the mortgage by valid written assignment at the time of notice and sale; failing that, the foreclosure is void to convey title and a quiet-title judgment in the foreclosing party’s favor must be denied.


U.S. Bank Nat’l Ass’n v. Ibanez, 458 Mass. 637 (2011)