United States District Court, D. New Hampshire
William M. Fannon and Catherine M. Fannon
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
DiClerico, Jr. United States District Judge.
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that they rescinded their mortgage loan under 15 U.S.C.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.
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).
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.
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.
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
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.
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.
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
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.
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 - ...