Mass. Federal District Court Issues Landmark Decision on Foreclosure Issues

This week, Judge William G. Young of the U.S. District Court for the District of Massachusetts issued an exhaustive 59-page decision addressing two key issues that recur in countless foreclosure cases:  the need for the foreclosing mortgagee to hold both the mortgage and the note, and the validity of a foreclosure of a mortgage once held by MERS (Mortgage Electronic Registration Systems, Inc.).  The case is Culhane v. Aurora Loan Services of Nebraska, and a copy of Judge Young’s magnum opus is here.  We’re still digesting this important decision, and will have more to say shortly.  In the meantime, the bottom line is that, in Judge Young’s view, (1) Massachusetts law allows the note and mortgage to be separated, but requires that the mortgagee either re-acquire the note, or prove that it is acting on behalf of the note-holder, before initiating foreclosure proceedings, and (2) MERS is a clever contraption that presents some troubling issues but does not run afoul of any provision of Massachusetts law.