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Fannon v. U.S. Bank, N.A.

United States District Court, D. New Hampshire

September 20, 2016

William M. Fannon and Catherine M. Fannon
v.
U.S. Bank, N.A., as Trustee of MASTR Asset Backed Securities Trust 2006-NCI, Mortgage Pass-Through Certificates, Series 2006-NCI Opinion No. 2016 DNH 170

          ORDER

          Joseph DiClerico, Jr. United States District Judge.

         William and Catherine Fannon brought suit against U.S. Bank, as Trustee of MASTR Asset Backed Securities Trust 2006-NCI, Mortgage Pass-Through Certificates, Series 2006-NCI, after the foreclosure sale of their home in April of this year. They challenge the validity of the foreclosure sale on the grounds that U.S. Bank was not the holder of the note and that they rescinded their mortgage loan under 15 U.S.C. § 1635 before the sale. They also allege claims of breach of the implied covenant of good faith and fair dealing and wrongful foreclosure. U.S. Bank moves to dismiss all claims, and the Fannons object.

         Standard of Review

         A motion to dismiss for failure to state a claim is governed by Federal Rule of Civil Procedure 12(b)(6). In considering a motion under Rule 12(b)(6), the court assumes the truth of the properly pleaded facts and takes all reasonable inferences from those facts that support the plaintiff's claims. Mulero-Carrillo v. Roman-Hernandez, 790 F.3d 99, 104 (1st Cir. 2015). Based on the properly pleaded facts, the court determines whether the plaintiff has stated “a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).

         Background

         The Fannons bought the property at issue in this case, located in New Ipswich, New Hampshire, from Catherine's sister in 1998. In 2005, the Fannons refinanced their mortgage with New Century Mortgage Corporation. William signed a note for $107, 000 that was secured by a mortgage on the property signed by both of the Fannons.

         In 2006, Wells Fargo Bank, N.A. and its subsidiary, ASC, succeeded New Century as servicers of the loan. On February 1, 2006, Wells Fargo Bank, N.A. Master Servicer and Trust Administrator and U.S. Bank N.A., Trustee were parties to a pooling and servicing agreement (“PSA”) that the Fannons allege created and set the terms for the MASTR Asset Backed Securities Trust.

         New Century filed for bankruptcy in 2007. Pursuant to the bankruptcy plan, on January 24, 2008, New Century assigned the Fannons' note and mortgage to U.S. Bank N.A., as Trustee for MASTR Asset Backed Securities Trust 2006-NCI. The assignment is signed by Anita Antonelli, vice president of loan documentation at Wells Fargo, under a limited power of attorney. On November 21, 2011, the mortgage and note were again assigned by New Century to U.S. Bank N.A., as Trustee for MASTR Asset Backed Securities Trust 2006-NCI, mortgage Pass-Through Certificates, Series 2006-NCI, with the assignment signed by Azza Zarroug, vice president of loan documentation at Wells Fargo, as attorney in fact for New Century.

         By 2006, the Fannons were in default on their mortgage payments. After they had missed fourteen payments, the Fannons entered a “Special Forbearance Agreement” that required five payments from November of 2008 through March of 2009. The Fannons only made four of the five required payments. In 2010 and 2013, the Fannons entered into trial modification plans but ASC, as servicer, found that the Fannons had not complied with the requirements. U.S. Bank began foreclosure proceedings on April 16, 2015.

         The Fannons retained counsel to assist them. Their requests for another loan modification were denied. The Fannons sent U.S. Bank a notice on May 15, 2015, to rescind their loan. U.S. Bank proceeded with foreclosure.

         The Fannons filed a petition in Hillsborough County Superior Court in November of 2015 to stop the foreclosure sale. In the petition, the Fannons alleged claims that U.S. Bank lacked authority to foreclose because it did not possess the original “wet-ink” note, that the mortgage assignment to the Trust was void, that U.S. Bank did not possess both the mortgage and the note before giving notice of foreclosure, that “AOM Missed Securitization Deadlines, ” that the note and mortgage were not conveyed to the Trust “via Requisite Chain of Transfer, ” that U.S. Bank failed to mitigate losses, and seeking rescission. After U.S. Bank moved to dismiss, the Fannons voluntarily dismissed all of their claims, and the case was terminated.

         When the foreclosure sale was scheduled again, the Fannons filed another petition to stop the sale in Hillsborough County Superior Court on April 17, 2016. U.S. Bank removed the case to this court on April 13, 2016, and moved to dismiss the complaint. The foreclosure sale was held on April 29, 2016. U.S. Bank bought the property at the sale for $75, 484.77.

         The Fannons filed an amended complaint on May 20, 2016. In their amended complaint, the Fannons allege: Count I - Lack of Power and Authority to Foreclose-U.S. Bank Cannot Show That It Is Agent of the Noteholder or That it is the Noteholder, Count II - Lack of Power and Authority to Foreclose-The Mortgage Assignments and Purported Note Negotiations are Void, Count III - Breach of the Covenant of Good Faith and Fair Dealing, Count IV - ...


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