744 F.3d 1 (1st Cir. 2014), 13-1298, Wilson v. HSBC Mortg. Servs., Inc.

Docket Nº:13-1298
Citation:744 F.3d 1
Opinion Judge:THOMPSON, Circuit Judge.
Party Name:TIMOTHY A. WILSON and CARRIE E. WILSON, Plaintiffs, Appellants, v. HSBC MORTGAGE SERVICES, INC., Defendant, Appellee
Attorney:Helene Gerstle for appellants. John S. McNicholas, with whom Lawson Williams and Korde & Associates were on brief, for appellee.
Judge Panel:Before Lynch, Chief Judge, Thompson, and Kayatta, Circuit Judges.
Case Date:February 14, 2014
Court:United States Courts of Appeals, Court of Appeals for the First Circuit

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744 F.3d 1 (1st Cir. 2014)

TIMOTHY A. WILSON and CARRIE E. WILSON, Plaintiffs, Appellants,



No. 13-1298

United States Court of Appeals, First Circuit

February 14, 2014

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[Copyrighted Material Omitted]

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Helene Gerstle for appellants.

John S. McNicholas, with whom Lawson Williams and Korde & Associates were on brief, for appellee.

Before Lynch, Chief Judge, Thompson, and Kayatta, Circuit Judges.


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THOMPSON, Circuit Judge.

Husband and wife Timothy A. Wilson and Carrie E. Wilson (collectively, " the Wilsons" ) appeal the district court's dismissal of their eight-count complaint alleging certain improprieties with respect to HSBC Mortgage Services, Inc.'s (" HSBC" ) acquisition of the mortgage on their home by way of an assignment from Mortgage Electronic Registration System, Inc. (" MERS" ). The Wilsons claim the assignment is void because it was executed not by MERS, but by an HSBC employee who falsely purported to sign on MERS's behalf. According to the Wilsons, HSBC never acquired the mortgage to their property and has no right to initiate foreclosure proceedings.

A homeowner in Massachusetts who is neither a party to nor a third party beneficiary of a mortgage assignment has standing to challenge the assignment on the grounds that it is void. Although the Wilsons' complaint sets forth some rather troubling accusations about HSBC's business practices and foreclosure procedures, the Wilsons have not set forth a colorable claim that the mortgage assignment in question is void. Because we agree they lack standing to raise certain claims, and because they have failed to state a claim for promissory estoppel with respect to a loan modification, their request for injunctive relief must also fail. Accordingly, we affirm.


The facts are straightforward. We recite them as alleged in the Wilsons' Amended Verified Complaint (" Complaint" ), supplementing as necessary with information found in the mortgage itself, public records, documents incorporated into the complaint by reference, and other matters susceptible to judicial notice.1 Giragosian v. Ryan, 547 F.3d 59, 65 (1st Cir. 2008).

On June 28, 2004, the Wilsons granted a mortgage on their property in Northborough, Massachusetts to Ameriquest Mortgage Company (" Ameriquest" ) in order to secure a promissory note. The mortgage was recorded on July 6, 2004, and on that

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same day Ameriquest assigned its interest in the mortgage to MERS (the " 2004 Assignment" ).2 The 2004 Assignment was recorded on February 8, 2005.

HSBC entered the picture on March 19, 2009, the date on which MERS purported to execute a document assigning the Wilsons' mortgage to HSBC (the " 2009 Assignment" ). The 2009 Assignment was recorded in the Worcester County Registry of Deeds on April 13, 2009. According to the Complaint, the 2009 Assignment " was executed by Shelene Strauss, as Vice President of MERS."

The Wilsons attached a copy of the 2009 Assignment to their Complaint. The document is entitled " Corporate Assignment of Mortgage" and identifies MERS as the assignor and HSBC as the assignee. It goes on to identify the original mortgage granted by the Wilsons for their property in Northborough. The assignment's text states, in pertinent part, " Assignor [MERS] hereby assigns unto the above-named Assignee [HSBC], the said Mortgage together with the Note or other evidence of indebtedness" with respect to the Wilsons' property. The signature block towards the bottom of the document reads as follows:


By: /s/ Shelene StraussSHELENE STRAUSS, Vice-President

The face of the 2009 Assignment further shows it was notarized on March 19, 2009, the same date upon which it was signed.

In spite of the 2009 Assignment's text, and notwithstanding their prior allegation that Strauss executed it on behalf of MERS, the Wilsons allege Strauss prepared the 2009 Assignment " on behalf of the assignee [i.e., HSBC] and not the assignor [i.e., MERS]." The Complaint further alleges that Strauss has notarized other mortgage assignments from MERS to HSBC on at least two occasions, and that she " prepared and signed a Satisfaction of Mortgage on behalf of Beneficial Financial, Inc." The Complaint goes on to allege that Strauss has " robo-signed documents assigning mortgages, including the [Wilsons'] mortgage, to [HSBC] from various lenders." The Wilsons do not define the term " robo-signed" in their Complaint.

Following the 2009 Assignment, HSBC, " relying on the robo-signed assignment[]," began foreclosure proceedings by sending certain notices to the Wilsons and making various filings in the Massachusetts Land Court. Throughout these proceedings, HSBC claimed that it held the mortgage on the Wilsons' property. The Wilsons, however, assert that HSBC did not, in fact, hold their mortgage because the 2009 Assignment was " robo-signed and therefore fraudulent."

The Wilsons go on to introduce allegations of irregularities regarding HSBC's foreclosure processes. In November 2010, HSBC reported to the Securities and Exchange Commission that it had halted its foreclosures because of " certain deficiencies in the processing, preparation and signing of affidavits and other documents supporting foreclosures... including the evaluation and monitoring of third-party law firms retained to effect [its] foreclosures." In April 2011, HSBC's parent company entered into a Consent Order with the United States Department of the Treasury Comptroller of Currency (the " Consent Order" ) stating, in part, that it

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had " identified certain deficiencies and unsafe or unsound practices in residential mortgage servicing and in the Bank's initiation and handling of foreclosure proceedings." According to the Complaint, the Consent Order required HSBC's parent company to hire an independent consultant to review certain residential foreclosure actions and to determine " whether loss mitigation activities with respect to foreclosed loans were handled in accordance with the requirements of the HAMP, and consistent with the policies and procedures applicable to the Bank's proprietary loan modifications or other loss mitigation programs." 3

Then, on November 21, 2011, MERS again purportedly assigned the Wilsons' mortgage to HSBC (the " 2011 Assignment" ). This 2011 Assignment was recorded on November 23, 2011. The Wilsons allege that HSBC was no longer a member of MERS at this point in time, having ceased its membership sometime in 2009. The Wilsons further allege that, as of the time they filed their Complaint, their mortgage was in " inactive" status with MERS. They have not alleged that HSBC (or MERS) has taken any further actions towards foreclosing on their property.

Indeed, it appears there was no further action at all with respect to the Wilsons' mortgage until the Wilsons submitted a hardship letter and income information to HSBC on March 26, 2012, in connection with a request for a loan modification. HSBC requested further information from the Wilsons the following day. According to the Wilsons, HSBC then " suggested" to the Wilsons that they would be required to pay 40% of the arrearage on their mortgage, approximately $25,000, as a condition of any loan modification. This offer does not comply with HAMP requirements, the Wilsons claim, because (1) HAMP does not require a down payment for a loan modification and (2) the Wilsons never received written notice that their request had been denied.

Wasting no time after making their request for a loan modification, the Wilsons filed their original complaint in the Massachusetts Land Court on March 30, 2012. HSBC promptly removed the matter to the United States District Court for the District of Massachusetts, and the Wilsons filed their " Amended Verified Complaint" on April 5, 2012. In addition to the facts recounted above, the Wilsons' eight-count Complaint contains the following allegations: (1) HSBC was not the present holder of their mortgage when it served them with a Notice of Right to Cure in 2009 and Notice of Intent to Foreclose in 2010, (2) HSBC fraudulently represented it was acting on behalf of MERS " when in fact it was acting on behalf of [HSBC] and assigning the mortgage to itself" with respect to the 2009 Assignment, (3) HSBC breached its contract with the Wilsons by attempting to foreclose on their property when it did not hold the mortgage, (4) HSBC violated its obligation of good faith and fair dealing with respect to its foreclosure attempts, (5) HSBC made a promise, upon which the Wilsons relied, that all documents to be recorded with respect to their mortgage would be reliable and " free

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from fraud," (6) HSBC wrongfully attempted to foreclose on their property, (7) HSBC should be promissorily estopped from offering the Wilsons a loan modification whose terms varied from HAMP requirements, and (8) the Wilsons are entitled to injunctive relief. The Complaint seeks both an award of damages and " a permanent and preliminary injunction to issue against [HSBC] enjoining [HSBC] from conducting a foreclosure sale."

HSBC fired back with a Rule 12(b)(6) motion to dismiss for failure to state a claim. The district court granted the motion and dismissed the case on September 14, 2012. Key to the district court's decision was its conclusion that the Wilsons did not have standing to challenge the 2009 Assignment because they were not a party to that assignment and were not third-party beneficiaries thereof.4 The next day the Wilsons filed a motion...

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