Amicus Curiae Brief — Margaly Philippe, Petitioner v. Wells Fargo Bank, N.A., Trustee

No. 24-6280

In the

Supreme Court of the United States

_______________________________

MARGALY PHILIPPE, PETITIONER

v.

WELLS FARGO, N.A. AS TRUSTEE FOR OPTION

ONE MORTGAGE LOAN, TRUST 2007-FXD1 –

RESPONDENT

_______________________________

BRIEF OF AMICUS CURIAE – GRACE ROSS

_______________________________

Karen Beyea-Schroeder

Schroeder Law Office PLLC

P.O. Box 131747

The Woodlands, TX 77393

Telephone (832) 585-9829

E-mail: Karen.Schroeder@SchroederLawOffice.com

February 12, 2025

Table of Contents

Table Of Authorities ............................................................. ii

Interest Of Amicus Curiae ..................................................... 1

Summary Of Argument ......................................................... 2

Argument ................................................................................ 3

Denied Statutory Hearings, Homeowners’ Defense Then

Denied as Untimely ...................................................... 3

Facts As To Originations ................................................. 8

Void Origination Offer Per Public Interest Law ............. 9

Mortgage Origination Is In The Public Interest Law

Arena ........................................................................... 10

Public Interest Law – Evolution and Treatment of

Fraudulent Offering ................................................... 11

What Was The Recent Pattern In Mortgage Fraud? .... 15

Public Interest Law Requires not Providing the

Fraudulent Offeror with their Desired Result .......... 17

Actual Knowledge Whenever Finally Acquired

Determines Judicial Course Of Action ...................... 20

Conclusion ............................................................................ 21

i

Table of Authorities

Cases

146 Dundas Corp. v. Chemical Bank, 400 Mass. 588 (1987)5

Abate v. Fremont Inv. & Loan, 470 Mass. 821 (2015) ......5

Berman v. Coakley, 243 Mass. 348 (1923)...........................13

Bevilacqua v. Rodriguez, 460 Mass. 762, 774 (2011) ..........18

Choquette v, Isacoff, 65 Mass. App. Ct. 1 (2005) ................19

Comm’r of Banks v. Chase Securities Corporation, 298

Mass. 285 (1937) ..................................................... 9, 10, 20

Commissioner of Banks v. Chase Sec. Corp., 298 Mass. 285

(1937).................................................................................18

Commonwealth of Massachusetts v. H&R Block, Inc. et al.,

No. 08-2474-BLS (Mass. Super. Ct. file June 3, 2008)......8

Commonwealth of Massachusetts v. H&R Block, Inc. No.

08-2474-BLS (June 3, 2008) .............................................18

Commonwealth v. Fremont Savings & Loan, No. 07-4373BLS1 (2008) ......................................................................15

Commonwealth v. Gustafsson, 370 Mass. 181 (1976) .........14

Community Nat’l Bank v. Dawes, 369 Mass. 550 (1976) ......4

Compare Murray v. C.N. Nelson Lumber Co. 143 Mass. 250

(1887).................................................................................10

Council v. Cohen, 303 Mass. 348 (1939) .................. 10, 13, 19

Denny v. Mattoon, 2 Allen 361 (1861) ...................................4

Drywall Sys., Inc. v. ZVI Constr. Co., 435 Mass. 664

(2002).” ..............................................................................11

Eaton v. FNMA, 462 Mass. 569 (2012) ..................................2

Farley v. Sprague, 374 Mass. 419 (1978) ..............................4

Goodwin v. Simpson, 292 Mass. 148 (1935) ........................18

Greenfield Country Estates Tenants Ass'n, Inc. v. Deep, 423

Mass. 81 (1996).”...............................................................10

Harrington v. Stratton, 22 Pick. 510 (1839) .......................18

Henry v. Mansfield Beauty Acad., Inc., 353 Mass. 507

(1968) (Wilkins, C.J.) ..........................................................6

HSBC Bank as Trustee v. Matt, 464 Mass. 193 (2013), ....1, 5

HSBC Bank as Trustee v. Morris, 490 Mass. 322 (2022) ...20

ii

International Fid. Ins. Co. v. Wilson, 387 Mass. 841 1983)

...........................................................................................11

John Hetherington & Sons, Ltd. v. William Firth Co. 210

Mass. 8 (1911) ...................................................................17

Kneeland v. Emerton, 280 Mass. 371 [(1932)] ..... 9, 11, 14, 18

Kraft Power Corp. v. Merrill, 464 Mass. 145 (2012) ...........11

Lechmere Tire & Sales Co. v. Burwick, 360 Mass. 718

(1972).................................................................................17

Maglione v. BancBoston Mtge. Corp., 29 Mass. App. Ct. 88

(1990).................................................................................18

McCarthy v. Tobin, 429 Mass. 84 (Mass. 1999) ..................10

McGrath v. Mishara, 386 Mass. 74, 85 (1982) ....................11

McKinley v. Warren, 218 Mass. 310 (1914) ........................19

Moore v. Dick, 187 Mass. 207 (1905) .....................................4

Murphy v. Barnard, 162 Mass. 72 (1894) .............................6

Nutter & Company v. Murphy, 478 Mass. 664 (2018)........16

Old Dominion Copper, C. Co. v. Bigelow, 203 Mass. 159

(Mass. 1909) ......................................................................20

Olde Towne Liquor Store, Inc. v. Alcoholic Beverages

Control Com’n, 372 Mass. 152 (1977) ................................4

Patch v. Cashman, 244 Mass. 378 (1923) ...........................19

Roche v. Gryzmish, 277 Mass. 575 (1931)...........................18

Schumacher v. Gleason, 97 Mass. App. Cr. 1109 (2020), .....1

Stacy v. Kemp, 97 Mass. 166 (2020) ....................................18

Stewart v. Finkelstone, 206 Mass. 28 (1910) ......................13

Suburban Land Co. Inc. v. Brown, 237 Mass. 166 (1921) .13

Statutes

Home Owner's Loan Act ......................................................10

MGL Ch. 100A (Sale of Securities Act ) ..............................11

MGL Ch. 183 §1 .....................................................................6

MGL Ch. 183 §18 ...................................................................6

MGL Ch. 183C (Massachusetts Predatory Home Loan

Practices Act; PHLPA) ..................................... 3, 15, 16, 20

MGL Ch. 244 §12 ...................................................................5

MGL Ch. 244 §13 ...............................................................1, 5

MGL Ch. 255E. .....................................................................15

MGL Ch. 93 §101 ...................................................................6

MGL Ch. 93A........................................................................11

iii

Other Authorities

8 Williston, Contracts § 19:79 (4th ed. 1998) ........................9

A Special Report on the Attorney General's Response to the

Home Improvement and Mortgage Scams in

Massachusetts: Enforcement, Legislation, and Regulation

(1992) (“Special Report”) ............................................ 12, 14

Eastern Massachusetts Street Railway v. Union Street

Railway, 269 Mass. 329, 333 (1929).................................17

Holtzman, Duke Univ., American Predatory Lending and

the Global Financial Crisis Oral History Project:

Interview with John Quinn, AM. PREDATORY

LENDING, at 6 (Jul. 24, 2020). .......................................15

Justice Gants’ discussion, Commonwealth of Massachusetts

v. H&R Block, Inc. et al., No. 08-2474-BLS (Mass. Super.

Ct. file June 3, 2008) ..........................................................8

MA Commissioner of Banks 1997 Industry Letter .............15

OCC Advisory Letter AL 2003-2............................................7

Office of the Comptroller of the Currency’s Handbook of

November 1997, “Asset Securitization; Liquidity and

Funds Management” ..........................................................7

R. Quercia, M. Stegman (1992). “Residential Mortgage

Default: A Review of the Literature,” Journal of Housing

Research 3 (2): 341-379. ...................................................17

Treatises

209 CMR 18 .................................................................... 10, 18

209 CMR 18. ...........................................................................4

940 CMR 3 .............................................................. 3, 7, 10, 19

940 CMR 32 ..........................................................................10

940 CMR 40 ..........................................................................10

940 CMR 7 ............................................................................10

940 CMR 8 ...................................................................... 10, 14

Regulations

Higgins v. Crouse, 147 N.Y. 411 (1895) ................................9

Parish v. Schwartz, 344 Ill. 563, 572 (1931) ........................9

Perley v. Balch, 23 Pick. 283 (1844) ....................................19

Constitutional Provisions

iv

Charlestown Five Cents Sav. Bank v. White, 30 F. Supp.

416 (D. Mass. 1939) ..........................................................18

Federal Housing Finance Agency v. Nomura Holding

America, Inc. et al, No. 1:2011cv06201 – Document 1287

(S.D.N.Y. 2015 ) ..................................................................8

Federal Trade Commission v. Sperry & Hutchinson

Trading Stamp Co. 92 S. Ct. 898 (1972) ..........................14

Federal Trade Comm'n v. R.F. Keppel & Bro., Inc., 291 U.S.

304 (1934)..........................................................................14

Fine v. Sovereign Bank, 634 F. Supp. 2d 126, 141 (D. Mass.

2008) ..................................................................................19

Herbert v. Sullivan, 123 F.2d 477 (1st Cir. 1941) ................9

Jesinoski v. Countrywide Home Loans, Inc., 574 U.S. 259

(2015).................................................................................19

O'Hara v. Ahlgren, Blumenfeld Kempster, 127 Ill. 2d 333

(1989)...................................................................................9

Raynor v. Russell, 353 Mass. 366 (1967) .............................10

Rhode Island v. Massachusetts, 37 U.S. 12 Pet. 657 (1838) .5

Sears, Roebuck & Co. v. Federal Trade Comm'n, 258 F. 307

(7th Cir., 1919) ..................................................................14

Sperry & Hutchinson Co., 405 U.S. 233 (1972) ..................14

Stanton v. Lighthouse Financial Services, 621 F. Supp. 2d 5

(D. Mass. 2009) .................................................................10

United Companies Lending Corp. v. Sargeant, 20 F. Supp.

2d 192 (D. Mass. 1998). ....................................................14

Federal Regulations

15 USC 163 ...........................................................................19

Dodd-Frank Act ......................................................................8

Federal Trade Commission Act §5 ........................................8

Federal Cases

Fed. R. App. P. 12 ...................................................................4

Fed. R. App. P. 56 ...................................................................4

Fed. R. App. P. 60 ...................................................................4

v

AMICUS STATEMENT 1

0F

This Court’s Amicus Curiae Grace Ross has relevant

Massachusetts specific legal research in this area. As coordinator of the 70-organization Massachusetts Alliance Against

Predatory Lending (MAAPL) for 13 years, this Court’s Amicus, Grace C Ross, has served as a focal point for attorneys

in private practice who litigate foreclosure issues in federal

and MA courts for 15 years. Through MAAPL, she supports

homeowners statewide to understand their legal rights, articulate the facts and caselaw in their cases and navigate our

legal system when representing themselves in post-purported-foreclosure Housing Court, Massachusetts Appeals

and Supreme Judicial Court (“SJC”) eviction cases.

Ross has had twenty-one Amicus briefs accepted by

the Massachusetts Supreme Judicial Court, eight by the Appeals Court 2; two by Massachusetts Housing Courts; two by

the First Circuit Court of Appeals.

1F

Your Amicus is not an attorney. Yet Ross’ decades as

a housing policy analyst, lobbyist for housing-related organizations, crafting legislation to address the ongoing home

foreclosure crisis, and in detailed negotiations with legislators over the precise meanings of proposed wording in related laws, make her well qualified to construe it. Her 2008

brief to the United Nations was cited in debate in the General Assembly, garnering coverage by 56 international news

outlets.

1 Counsel had no opposing counsel of record in this matter ten days

prior to the deadline. Where the tenth day prior fell on a Sunday, she

arranged courtesy notice to the lower court counsels of record on February 3rd, 2025. Counsel reviewed and edited brief. Neither counsel, nor

any party made a monetary contribution.

2 In the HSBC Bank as Trustee v. Matt, 464 Mass. 193 (2013), the Court

directly addressed part of Ross’s argument at footnote 7. Further, in

Schumacher v. Gleason, 97 Mass. App. Cr. 1109 (2020), Ross’s Amicus is

referenced as Note 5 to a key finding by the court.

SUMMARY OF ARGUMENT

This Court can finally give recognition to consumer,

real property and negotiable note violations in the attempted origination rendering the original mortgages and

Notes void. Under Public Interest Law, homeowner-mortgagors’ new actual knowledge and proven evidence of pattern and practice of fraudulent mortgage contract offering

have rendered their attempts to be heard as to these violations timely, as long as raised once actually acquired. Yet,

denied their due process (and contractual 3) rights to defend

the titles and possession to their homes in the Massachusetts courts in accordance with both the mandated statutory proceedings in the state foreclosure-by-sale scheme

and state eviction scheme (with its unique SJC-promulgated procedural rules and requirements), the Petitioners

here (and the tens of thousands of homeowners like them)

have been rendered legally-mute.

2F

Mortgage origination fraud is covered under public

interest law. As such, a victim is not even charged with inquiry knowledge until he/she has actual knowledge of the

violation of his/her rights. At that point, as long as he/she

acts reasonably quickly, as soon as he/she notifies a court,

the offer at origination is to be recognized as a nullity; that

is, it is a nullity before an ‘acceptance’ could even be considered to have been made via execution of the contractual instruments.

Moreover, where each piece of land is unique, the

victim not only has a right to “the injured party shall be

placed in the same position they would have been in, if the

contract had been performed”, but he/she is due specific

3 This posture in the uniform FNMA/FHMLC mortgage contract lan-

guage, the SJC held strict compliance with it for a foreclosure by sale

valid not “wholly void”: "of the right to reinstate after acceleration

and the right to bring a court action to assert the non-existence of a default or any other defense of [the plaintiffs] to acceleration and sale"

Eaton v. FNMA, 462 Mass. 569 (2012) [emphasis by SJC]

2

performance to retain ownership.

ARGUMENT

Denied Statutory Hearings, Homeowners’ Defense

Then Denied as Untimely

Homeowner borrowers are routinely told by Massachusetts courts that they are untimely in their defenses of

their title and, even, possession of their home and on that

basis even cursory review is denied. Denied access to court

proceedings which are statutorily provided to defend their

title, when they are finally notified of the one still-enforced

defensive proceeding – that of an eviction/”Summary Process” case – Housing Court judges (who overwhelmingly

hear these cases) refuse transfer to a Court competent to

adjudicate title after Plaintiff’s title claim is challenged and

any otherwise meaningful review in compliance with due

process standards.

As with these four petitioners, and hundreds like

them, having raised the predatory and prohibited nature of

the origination of their loans, as an original defense at the

beginning of their eviction cases, the judges denied them

consideration as to those violations; judges told them that

they should have raised these earlier in the life of the loan

and purported default and foreclosure, and were, then, too

late. Even though Massachusetts law requires a proof of an

entire, unbroken, and valid chain of title, judges denied review of legal statutory 4 violations and various steps in the

purported conveyancing of title and transfer of a still negotiable mortgage note; any violations of strict compliance of

these, if true, demonstrate voidness. They further ignore

3F

4 Cf. the 2004 Massachusetts Predatory Home Loan Practices Act (MGL

Chap. 183C), which codified the 1990s regulatory protections; Massachusetts Consumer Law (MGL Chap. 93A) and the regulatory codification of the ancient warrant of merchantability (940 CMR 3) and hundreds of years of real property conveyancing requirements.

3

that voidness is never subject to laches 5, and can neither

ever ripen 6 into or be judicially declared 7 a legal act.

4F

5F

6F

As well, these petitioners, like tens of thousands of

other homeowners, were denied the jurisprudence that

holds that their sworn and uncontroverted statements require judicial reliance by these same judges 8. Such competent sworn personal knowledge includes as to violations

that meant: the origination instruments were prohibited

and, therefore, void; failures of legally required origination

disclosures; public record evidence that parties that claimed

to have ownership via a compliant “chain of title and ownership of the Note and mortgage” 9 did not legally comply

and/or are barred from such acquisition by their own founding documents and other prohibitions, such as purported

trusts that fail the Statute of Frauds as having never had

an executed founding document.

7F

8F

The untimeliness mischaracterization is especially

problematic where statutorily required origination disclosures were routinely denied or misrepresented. The actual

necessary parties to the mortgage and note contract, likewise, were routinely misrepresented.

5 “the mortgagor, who never has been deprived of the legal title to the

land, may maintain a bill in equity to redeem it from the mortgage at

any time within twenty years, and no delay on his part within the period of limitation can be accounted laches.” Moore v. Dick, 187 Mass.

207, 207 (1905)

6 Denny v. Mattoon, 2 Allen 361, 383 (1861)

7 Kleber, John C, VOID Judicial and Execution Sales and the Rights,

Remedies and Liabilities of Purchasers Thereat with a Brief Discussion

of Curative Statutes and Special Statutes Authorizing Involuntary

Sales, Library of the University of Michigan Law School (1899), p. 70

8 Citing FRCP Rules 12, 56 & 60 interpretation, see Farley v. Sprague,

374 Mass. 419, 424 (1978); Olde Towne Liquor Store, Inc. v. Alcoholic

Beverages Control Com’n, 372 Mass. 152, 154-155 (1977); Community

Nat’l Bank v. Dawes, 369 Mass. 550, 554 (1976)

9 209 CMR 18.24 regulatory proof and certification required in pre-fore-

closure Notice of Sale to homeowner; not ever complied with.

4

Homeowner borrowers with the contractual right to

defend their title 10 are overwhelmingly denied participation

at the first court proceeding immediately after default and

acceleration of the loan. This proceeding is called the “Active Military Service Proceeding” and is denied to anyone

not in active military service.

9F

In such proceedings, with homeowners denied the

right to discovery, provide evidence and defend their title at

that stage in the nonjudicial foreclosure process, Massachusetts law requires that Active Military Proceeding judges

have a sua sponte responsibility to demand such discovery,

to ensure the “person selling” has the requisite interest in a

still enforceable mortgage and note. Active Military Service

judges make no requests for discovery of any kind. They fail

their jurisprudential obligation to determine standing, and,

therefore, their own subject matter jurisdiction 11 and their

obligation to the defendant who has been denied the right

to participate 12.

10F

11F

Homeowner borrowers in the last 30 or so years

have, then, been further denied their right to the judicial

review step in the foreclosure by sale statutory scheme in

Massachusetts (MGL Chapter 244 §§12 & 13) which the

foreclosure auction “person selling” is required to commence

within 10 days well before the 30-day closing deadline 13.

12F

10 As well as the mortgage covenant liability to defend the title of the

real mortgagee but in contrast to Ibanez have been denied the right to

have challenges to mortgage conveyances (with published facial defects)

judicially enforced.

11 Cf. Abate v. Fremont Inv. & Loan, 470 Mass. 821, 828 (2015);

Rhode Island v. Massachusetts, 37 U.S. 12 Pet. 657 (1838)

12 HSBC Bank USA, N.A. v. Matt, 464 Mass. 193 (2013)

13 When these two laws were enacted in 1851 and 1854 respectively, the

standard closing was in 60 days. Even 35 years ago when MGL Chapter

244 §§12&13 adjudication was still occurring the closing deadline was

only initiated upon final statutorily-required affirmation of a foreclosure auction sale. See 146 Dundas Corp. v. Chemical Bank, 400 Mass.

588, Note 9 (1987)

5

This leaves these Petitioners (and many 10s of thousands of

homeowners), again, denied their timely discovery rights,

their right to challenge the standing of the party claiming

to foreclose, and, again, their right to timely defend their title to their property.

Judicial decisions from Housing Court eviction

judges like in these Petitioners’ cases, then, treat all of the

above general defenses are precluded, because 1) the foreclosure sale purportedly went through, 2) the homeowner

was induced to take the offer of mortgage and note instruments that fact and law show were a nullity when presented to them (See below), 3) they purportedly lack the

very standing required to meet their jurisprudential legal

obligation to ascertain the pre-foreclosure noteowner had

legally acquired a still negotiable note 14 and the person

selling legally acquired an enforceable mortgage 15, and 4)

they are held responsible for not having challenged the

foreclosure sale sooner.

13F

14F

Under MGL Chapter 93 §101, these homeowners’

consumer law and regulatory defenses cannot be waived,

including residential mortgage law and regulations unless

a waiver is explicitly included 16. The homeowners had no

reason to presume such origination violations until they

faced foreclosure; nor have 20 years of Massachusetts state

and federal court action provided the discovery rights, so

that the research, facts and widespread fundamental violations have been heard and adjudicated.

15F

Public interest law includes Massachusetts consumer and thus mortgage law; direct violation of statue or

14 See Murphy v. Barnard, 162 Mass. 72, 78-79 (1894) requirements

once mortgage paper became negotiable notes.

15 Where Massachusetts mortgages are deeds (MGL Chapter 183 §18)

and the homeowner warrantees the legal title of the real-mortgage-ininterest (mortgage contract wording and MGL Chapter 183 §19), they

have liability and so must have standing.

16 See “Cf. Henry v. Mansfield Beauty Acad., Inc., 353 Mass. 507, 511

(1968) (Wilkins, C.J.)

6

regulation render the mortgage and note contracts herein

as a “nullity”. Further, Specific Performance provides putting homeowners in the position they would be in if the verbal origination warrantees had been performed.

The misrepresented origination disclosures included

written assurances of being able to afford a significantly

overpriced property valuation. Via appraisals the homeowners themselves were assured the mortgage was not

more than the real value. Only in recent years have these

homeowners gotten actual knowledge that the Office of

Comptroller of the Currency (“OCC”) provided lenders the

legal requirement that a loan cannot be more than the collateral’s true value in 1997; that is, the full value of the

loan (a key Truth-in-Lending Act provision) against the

more accurate municipal assessment value available at

that time. Their single underwritings were far beyond the

permissible 97% of the OCC. 17 The OCC’s still enduring position: no mortgage can be originated for over 100% of the

real property value. 18

16F

17F

A promise was also made as to the actual original

lender but the named entities in the purported mortgages

and Notes were not the real source of money violating 940

CMR 3 and OCC requirements 19.

18F

However, Public Interest Law provides as to a residential mortgage and, thus, consumer transaction, the

homeowners had no obligation to question the legality of

the entity they were warranteed to be contracting with and

are only charged with actual knowledge as they gained it.

17 OCC’s Handbook of November 1997, “Asset Securitization; Liquidity

and Funds Management”

18 The Comptroller’s 2015 Handbook on Safety and Soundness Asset

Quality (Residential Real Estate section) breaks the institutions it monitors into 3 sections.

Only “Large Lenders” are allowed to sell “products with CLTV

[combined loan to value] ratios up to 100% may exist.”

19 OCC Advisory Letter AL 2003-2

7

Moreover, only one party entered the negotiations

signing a 30-year commitment; the other parties drafted,

provided and oversaw alleged executing of mortgage and

note contracts knowing they would be bound for, at most, a

few months until they sold on the secondary market. 20.

19F

As the jurisprudence holds, justice is not only necessary for these homeowners but to end predatory victimization to benefit Commonwealth’s people, in general. See

Arcidi below.

Where the state land law is comparable to that of

Massachusetts, this Court’s action will benefit people of numerous states and is necessary to enforce the Federal Trade

Commission Act §5.

Facts As To Originations

Prior to closing both the real mortgagee and lender

were not disclosed to these homeowners. In closing, each

homeowner was guided to sign two adhesion contracts –

one titled “Mortgage” as the security instrument for one titled “Note”. In separate consumer law violation, they were

never given a chance to review in advance nor at closing.

They were provided over-inflated appraisals – a well-documented industry-wide malpractice 21 later addressed in the

Dodd-Frank Act. The funding stream and securitization of

the mortgage loan (mortgage and note together) within 90

days was not notified to them and misrepresented in the

public Registries for many years whether by FNMA or

FHLMC or a private label bundler hiding an ultra vires and

thus void act 22.

20F

21F

20 Cf. Justice Gants’ discussion, Commonwealth of Massachusetts v.

H&R Block, Inc. et al., No. 08-2474-BLS (Mass. Super. Ct. file June 3,

2008)

21 Federal Housing Finance Agency v. Nomura Holding America, Inc. et

al, No. 1:2011cv06201 – Document 1287 (S.D.N.Y. 2015 )

22 “[I]t has long been the rule in Massachusetts that an ultra vires con-

tract is void, no action thereon being maintainable.” Herbert v.

8

Void Origination Offer Per Public Interest Law

In 1937 23, the SJC formulated a three-part test for

recognizing as void a contract violation of public interest

laws::

22F

“The right to recover the consideration paid, though

the transaction is illegal and fully executed, rests on

the ground that [1] the purchaser belongs to the class

of persons which the statute aims to protect, [2] that

the prohibition of the statute does not apply to the purchaser but applies only to the seller, and [3] that the

purchaser does not participate in the wrongdoing with

full knowledge of material facts. Kneeland v. Emerton,

280 Mass. 371, 378-379, 383 [(1932)]. ” Comm’r of

Banks v. Chase Securities Corporation, 298 Mass. 285,

292 (1937).

Also, a contract is recognized as void firstly to ensure

public interest purpose is met:

“'[T]he interest of the public, rather than the equitable standing of the individual parties, is of determining importance.'" O'Hara v. Ahlgren, Blumenfeld

Kempster, 127 Ill. 2d 333, 348 (1989), quoting Parish v. Schwartz, 344 Ill. 563, 572 (1931). See 8 Williston, Contracts § 19:79 (4th ed. 1998).

And only actual knowledge once obtained controls:

“in the view most favorable to the defendant … Until

reason to the contrary appeared the plaintiffs were entitled to assume that the defendant was not violating

the law. Kneeland v. Emerton, 280 Mass. 371, 383.

They had no primary duty to use diligence to discover

a possible violation of the statute. See Higgins v.

Sullivan, 123 F.2d 477, 478 (1st Cir. 1941)

23 Shepardization demonstrates still good law

9

Crouse, 147 N.Y. 411, 420. Compare Murray v. C.N.

Nelson Lumber Co. 143 Mass. 250, 251” Commissioner of Banks v. Chase Sec. Corp., 298 Mass. 285,

325 (1937)

Moreover, where the contract in question regards

a conveyance of property, ‘specific performance’ is implicated:

“specific performance… is usually granted in disputes involving the conveyance of land. Raynor v.

Russell, 353 Mass. 366, 367 (1967), …. "It is well-settled law in this Commonwealth that real property is

unique and that money damages will often be inadequate to redress a deprivation of an interest in land."

Greenfield Country Estates Tenants Ass'n, Inc. v.

Deep, 423 Mass. 81, 88 (1996).” McCarthy v. Tobin,

429 Mass. 84 (Mass. 1999)

Mortgage Origination Is In The Public Interest Law

Arena

“Courts grant equitable relief to a party to an illegal contract "where the provision of law rendering the contract illegal was clearly intended

to benefit one party over the other, i.e., the public policy is intended to protect persons of the class to

which one party belongs." Arcidi, 447 Mass. at 621,

…. In Council v. Cohen, 303 Mass. 348,… (1939),

… the court held that a second mortgage was invalid

as prohibited by the Home Owner's Loan Act, but

nonetheless allowed the plaintiff to recover interest paid on the mortgage because the act's "intent is to aid the home owner and not the mortgagee." Stanton v. Lighthouse Financial Services, 621

F. Supp. 2d 5, 17-18 (D. Mass. 2009) [bold added]

Residential mortgage loans are, by definition, consumer products. See mortgage origination and servicer

10

regulations (940 CMR 3, 7, 8 & 209 CMR 18, 32, 40) are per

se Chapter 93A violations. Consumer law, a perfect exemplar of public interest law, provides up to triple damages:

““Like the punitive …, the multiple damages available

under G. L. c. 93A, § 11, are part of a legislative

scheme to vindicate broader public interests. … to

eradicate unfair methods of competition or deceptive

acts or practices in trade and commerce. See International Fid. Ins. Co. v. Wilson, 387 Mass. 841, 857

(1983), quoting McGrath v. Mishara, 386 Mass. 74, 85

(1982)…

“We have previously explained that multiple

damages are meant to deter both "actual and potential wrongdoers." Drywall Sys., Inc. v. ZVI Constr. Co., 435 Mass. 664, 670 (2002).” Kraft Power Corp.

v. Merrill, 464 Mass. 145, 163-64 (2012) [bold added]

Public Interest Law – Evolution and Treatment of

Fraudulent Offering

Violation of a statute governing contracts and passed

with the intention of protecting the public from fraud can

render the offer of such a purported contract void. Once identified as void, no court can ratify into existence a void act nor

would one ever want to uphold a fraudulent contract harming not only that party but the public interest in protecting

that ‘class’ of parties.

In Kneeland v. Emerton, 280 Mass. 371, 376 (1932),

the SJC explicated the effect of regulations governing contracts intended to prevent fraud. Faced with whether a violation of MGL Ch. 100A (“the Sale of Securities Act”) could

render a transaction “absolutely void” the Court held it does:

“In construing statutes of that nature, it is established doctrine that a contract prohibited by the

statute under penalty made for the benefit of

the person parting with his valuable property

11

will be void at his instance in like manner as if

in terms declared to be a nullity. The plaintiff as

purchaser in ignorance of the fact that as to the shares

of stock sold him by the defendant there had been failure to comply with the statute is not in pari delicto

with the defendant.” Id. at 373 [emphasis added].

The Court here is not voiding the contract but held it

void at offer given statutory violation (before it could be

“fully executed”.) The long-standing principal is that “the

large class” statutes designed to protect individuals paying

“money or other consideration” to a receiver engaged in legislated fraudulent activity renders the contract void for reasons of public policy. The Court noted that although “[t]here

is no express provision to that effect in the statute,” the recent amendments were enacted because a commission reported “the great evil existing from lack of regulation of the

sale of stock and other corporate securities and the enormous

losses sustained annually by the people of the Commonwealth through sales to him of such securities.” Id. at 376.

(Similarly, the extensively researched 1992 Harshbarger

Task Force Report warned of the pattern of predatory lending as “urban economic violence”) As such, the Court found

that:

“[t]he statute here in question falls within the large

class whereby it has been enacted that contracts are

prohibited chiefly for the benefit of the person paying

money or other consideration and the receiver is the

principal offender. In such instances the latter may

be compelled to refund.” [Emphasis added] Id. at

379.

A purchaser who has been defrauded by a seller violating this statute is entitled to the highest level of protection

available from the legislature: that such transactions are

void as a matter of law:

“In construing statutes of that nature, it is established doctrine that a contract prohibited by the

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statute under penalty made for the benefit of

the person parting with his valuable property

will be void at his instance in like manner as if

in terms declared to be a nullity.” Id. at 379 [emphasis added].

The onus is on the seller to understand and comply with the

law. The Court held:

“The plaintiff in all the circumstances disclosed was

not chargeable to his harm with constructive

knowledge…[The plaintiff] had a right to assume

that the defendant was not violating the law.

There is nothing in the record to support a contention

that the plaintiff has waived his rights under said

chapter, or that he has been guilty of laches in enforcing them. Suburban Land Co. Inc. v. Brown, 237 Mass.

166, 168. Stewart v. Finkelstone, 206 Mass. 28, 35-36.”

Id. at 384 [emphasis added]. ,

The Court felt that preventing fraud touches “almost

everyone” and that legislature dealing with preventing fraud

was familiar to most of the general population. Id. at 388 –

389. As such, the statutory terms should be read as the average person, whom the law protects, would understand

them.

In Council v. Cohen, 303 Mass. 348, 355 (1939), this

principle was applied to mortgage contracts. The Court declared his second mortgage void, stating:

“It is well settled that ‘courts will not aid in the enforcement, nor afford relief against the evil consequences, of an illegal or immoral contract… where

the parties are not in equal fault as to the illegal element of the contract, …, and where there

are elements of public policy more outraged by

the conduct of one than of the other, then relief

in equity may be granted to the less guilty.’”

Council, 303 Mass. at 354, citing Berman v. Coakley,

243 Mass. 348, 350 [emphasis added].

13

Commonwealth v. Gustafsson, 370 Mass. 181, 187

(1976) held:

“A court may be guided by the text of the statute and a

consideration of the abuses sought to be remedied by

its enactment. …, or on the well settled common law

meanings of words such as ‘unfair’ and ‘unreasonable’

… long … part of our judicial system. See, e.g.,

Kneeland …”

Through Gustafsson, the 1st Circuit also affirmed

Kneeland:

“In speaking of unfair or deceptive practices, Congress

and the Federal Trade Commission have taken the position that a specific definition of such practices is not

appropriate as it would necessarily be under-inclusive, creating a shield for subsequent unfair or deceptive practices as the markets for goods and services

evolve. See Sperry & Hutchinson Co., 405 U.S. at 239,

92 S. Ct. 898;Federal Trade Comm'n v. R.F. Keppel &

Bro., Inc., 291 U.S. 304, 310, 54 S. Ct. 423, 78 L. Ed.

814 (1934) … Gustafsson, 370 Mass. at 187, [] (quoting

Sears, Roebuck & Co. v. Federal Trade Comm'n, 258

F. 307, 311 (7th Cir.1919)” United Companies Lending

Corp. v. Sargeant, 20 F. Supp. 2d 192, 205 (D. Mass.

1998).

Contracts made in violation of laws that protect the

public from fraud are void at origination; any court is to

treat them as “void at [the victim’s] insistence in like manner as if in terms declared to be a nullity.” Kneeland at 379.

Similarly in the public interest, Attorney General

Harshbarger promulgated “unprecedented and creative regulations to curb future abuses” 24 (940 CMR 8 25) of the

23F

24F

24 P.2 cover letter, A Special Report on the Attorney General's Response

to the Home Improvement and Mortgage Scams in Massachusetts: Enforcement, Legislation, and Regulation (1992) (“Special Report”)

25Harshbarger

also garnered enactment of corresponding criminal

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mortgage lending practices then being regularly practiced by

brokers originators and lenders. He forewarned Massachusetts courts and Government generally that “aggressive vigilance” would be necessary:

“The irresponsible lenders who preyed on these vulnerable consumers were interested primarily in the equity

that these homeowners had built up in their homes,

rather than whether consumers could repay the loans

with their monthly income. …Those hardest hit …

were the elderly, those already in financial distress,

those unsophisticated in financial transactions, communities of color and others, who while income poor or

on fixed incomes, had built up significant equity in

their homes.”

State and Federal industry notices expressed concern

about the burgeoning number of subprime loans, the ease

with which those could be predatory. See MA Commissioner

of Banks 1997 Industry Letter as to prohibited practices

from origination through foreclosure. The 2004 Predatory

Home Loan Practices Act was enacted because “a purely regulatory approach proved insufficient.” 26

25F

What Was The Recent Pattern In Mortgage Fraud?

In Commonwealth v. Fremont Savings & Loan, No.

07-4373-BLS1 (2008), the later Chief SJC Justice Gants defined mortgages “doomed to foreclose”:

“To issue a home mortgage loan whose success relies

on the hope that the fair market value of the home

will increase … is as unfair as issuing a home mortgage loan whose success depends on the hope that

the borrower's income will increase….” At 21-22.

enforcement MGL Ch. 255E.

26 Holtzman, Duke Univ., American Predatory Lending and the Global

Financial Crisis Oral History Project: Interview with John Quinn, AM.

PREDATORY LENDING, at 6 (Jul. 24, 2020).

15

Recognizing that our consumer law is neither ‘wholly

torturous nor wholly statutory” he cited the PHLPA:

“The Legislature plainly deemed it predatory and,

thus, unfair for a lender to make a high cost home

loan, quickly reap the financial rewards from the

high points, fees, or interest, and then collect the balance of the debt by foreclosing on the borrower when,

as the lender reasonably should have foreseen, he

cannot meet the scheduled payments. The Legislature… was disturbed by mortgage foreclosures of the

borrower's principal dwelling …” At 18

In the modern era, the originator’s quick ‘reaping’

was sped up not considering the realistic loan value but by

fashioning an attractive sale within 3 months on the “secondary market” recouping their entire investment. Gants

again:

“What has changed since the Legislature promulgated the Act is the increasing prevalence of mortgage-backed securities, which enabled lenders… to

assign large quantities of their high-risk mortgages,

take a quick profit, and avoid the risks inherent in

the loan.” At 23 (Gants’ cites the regulatory guidance

to offload such loans within 3 months to avoid regulatory audits.)

Hence, any judicial presumption, even if no legal

written mortgage contract could exist, that the homeowner

was bound to a 30 year presumptive obligation (Quantum

Meruit) was made folly not by the actions and presumptions

of committed and trusting homeowners but by originators

and a restructuring of the mortgage markets.

Further, Petitioners were confronted with adhesion

contracts they were promised were legal and affordable –

they were neither but homeowners relied on those promised

meanings. 27

26F

27 See Nutter & Company v. Murphy, 478 Mass. 664 (2018) citing

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Public Interest Law Requires not Providing the

Fraudulent Offeror with their Desired Result

“"The fundamental principle of law upon which

damages for breach of contract are assessed is that

the injured party shall be placed in the same position

he would have been in, if the contract had been performed, so far as loss can be ascertained to have followed as a natural consequence and to have been

within the contemplation of the parties as reasonable

men as a probable result of the breach, ..." John

Hetherington & Sons, Ltd. v. William Firth Co. 210

Mass. 8, 21.” Eastern Massachusetts Street Railway

v. Union Street Railway, 269 Mass. 329, 333 (1929)

‘Reasonable men’ of the highly developed banking industry cannot deny that ‘natural consequence’ as a more

than ‘probably result’. The FNMA-financed, historic literature review back to the 1960s 28 demonstrated loan-to-value

ratios close to, at or, certainly if over, 100% were either the

single most important factor to default/foreclosure or was so

when combined with Debt-to-income ratio to lead.

27F

Thus, the informed and fraudulent seller cannot be rewarded with the default and foreclosure, which its actions

predictably put in motion:

“Such a purchaser is permitted to recover the consideration paid by him, notwithstanding the fact that

the transaction is fully executed, for the reason that,

Lechmere Tire & Sales Co. v. Burwick, 360 Mass. 718, 720-721 (1972)

("an 'adhesion' contract [is] to be construed strictly against [the party]

in whose behalf it ha[s] been drafted"). See also Restatement (Second)

of Contracts, supra at § 211 comment c ("standard terms . . . are construed against the draftsman").

28 R. Quercia, M. Stegman (1992). “Residential Mortgage Default: A Re-

view of the Literature,” Journal of Housing Research 3 (2): 341-379.

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if such relief were denied, the statute, as stated in

Kneeland v. Emerton, 280 Mass. 371, 379, "would

signally fail of its beneficent object," or, as expressed

in Goodwin v. Simpson, 292 Mass. 148, 155, "the full

and complete protection which the statute was intended to afford buyers" would not be given.” Commissioner of Banks v. Chase Sec. Corp., 298 Mass.

285, 329 (1937)

Commonwealth of Massachusetts v. H&R Block, Inc.

No. 08-2474-BLS (June 3, 2008) defined predatory loans as

“reckless disregard of the risk of foreclosure.” See as prohibited by 209 CMR 18.24: Mortgage Loan Servicing Practices:

“(1)(d) Knowingly or recklessly facilitating the illegal foreclosure of real property collateral.”

In Massachusetts, mortgage contracts bifurcate the

deed and so, if not void, are conveyances of title. 29 Roche v.

Gryzmish, 277 Mass. 575, 578-579 (1931) provided a review

of that “long settled” law as to ‘specific performance’:

28F

“It has long been settled that in an action on a promissory note, given for the price of personal property,

the maker may show in reduction of damages that

the sale was entered into by him by reason of the

false representations or fraud on the part of the

payee, although the property has not been returned

or tendered to him. Harrington v. Stratton, 22 Pick.

510. Stacy v. Kemp, 97 Mass. 166….The rule is well

established that a purchaser of property who is defrauded in the purchase may keep the property and

recover…damages occasioned by the fraud…Perley v.

29 “In Massachusetts, a "mortgage splits the title in two parts…

Maglione v. BancBoston Mtge. Corp., 29 Mass. App. Ct. 88, 90 (1990).

The purpose of the split is "to give to the mortgagee an effectual security for the payment of a debt [while] leav[ing] to the mortgagor . . . the

full control, disposition and ownership of the estate." Santiago v. Alba

Mgt., Inc., 77 Mass. App. Ct. 46, 49 (2010), quoting Charlestown Five

Cents Sav. Bank v. White, 30 F. Supp. 416, 418-419 (D. Mass. 1939).”

Bevilacqua v. Rodriguez, 460 Mass. 762, 774 (2011)

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Balch, 23 Pick. 283. McKinley v. Warren, 218 Mass.

310. Patch v. Cashman, 244 Mass. 378.”

In placing the parties back pre-void contract, the

homeowner’s land is not be returned. See U.S. Supreme

Court unanimous decision as to residential mortgage recission. 30 As Public Interest Law, the members of the targeted

“class” remain the priority to be made whole in the unraveling of the fraudulent offer:

29F

“"cases where the public interest requires that [the

courts] should, for the promotion of public policy, interpose, and the relief in such cases is given to the

public through the party." Choquette, 65

Mass.App.Ct. at 4, …(quoting Council v. Cohen, 303

Mass. 348, 354-55, …(1939))” Fine v. Sovereign Bank,

634 F. Supp. 2d 126, 141 (D. Mass. 2008)

940 CMR 3.01 (codification of the ancient warranty

of merchantability):

“Where the seller at the time of contracting has reason to know any particular purpose for which the

goods are required and that the buyer is relying on

the seller's skill or judgment to select or furnish suitable goods, there is an implied warranty that the

goods shall be fit for such purpose.

In contrast to the later induced but void execution,

homeowners were warranteed a loan for real percentage of

the then real assessed property value 31, a 30-year affordable interest rate with the true lender. Law including specific performance requires Petitioners retain their home, affordable mortgage payments based the original promised

percentage of real property value at origination. They must

30F

30 Jesinoski v. Countrywide (2015): “it is also true that the act disclaims

the common law condition precedent to rescission at law that the borrower tender the proceeds received under the transaction 15USC Section 1635b.”

31 OCC 2015 guidance relies upon municipal assessments

19

be made whole as to the harm to health, relationships,

credit and any other damage. Thus far muted as to its use,

the PHLPA provides recognizing the origination void even

as a Summary Process defense. HSBC Bank as Trustee v.

Morris, 490 Mass. 322, 327-329 (2022).

Actual Knowledge Whenever Finally Acquired Determines Judicial Course Of Action

As an area of public interest law, homeowner-borrower as victim of a trusted professional are not even

charged with ‘inquiry notice’. Commissioner of Banks v.

Chase Sec. Corp., 298 Mass. 285, 325 (1937:

“there could be no ratification or confirmation

of the sale in question "unless and until the

plaintiff had knowledge of the facts upon

which he now bases his right to rescind" or "by

any act of the purchaser done without

knowledge of those facts which render the sale

void."

Massachusetts law recognizes trustee/fiduciary relationship with the (real) mortgagee in a mortgage conveyance inclusive of the preservation of equitable right to redeem in the face of the Private Power of Sale:

“There can be no laches so long as there is no

knowledge of the wrong complained of and no failure

to avail one's self of reasonable opportunities to ascertain the facts…., the statute of limitations does

not begin to run until the facts have been or ought to

have been discovered.” Old Dominion Copper, C. Co.

v. Bigelow, 203 Mass. 159, 161 (Mass. 1909)

The Petitioners know now and have repeatedly provided under uncontroverted oath personal and documentary evidence of violations in their own mortgaging contract

histories, based on ancient and recent caselaw and more recently as part of massive patterns. Yet, a meaningful time

20

and manner alludes them in repeated attempts to preserve

their possession while repeatedly muted in proving up their

title in pursuit of the judicial oversight and enforcement.

CONCLUSION

This Court’s action could still be timely to provide

justice to Petitioners and the public: (i) Massachusetts’s

shortest Statute of Limitations (adverse possession) is 20

years for the illegal taking of a real property interest; (ii)

Consumer law cannot be waived and is timely when raised

timely to the actual knowledge of the victims of widespread

public interest law violators; (iii) specific performance is the

standard for a land contract; (iv) full justice and restitution

is provided under equity and in specific statutes and regulatory promulgation . These all guarantee meaningful impact by this Court on tens of thousands of Massachusetts

households and in other states with similar foreclosure-bysale statutory schemes.

Respectfully submitted,

Karen Beyea-Schroeder

Schroeder Law Office PLLC

P.O. Box 131747

The Woodlands, TX 77393

Telephone (832) 585-9829

E-mail: Karen.Schroeder@Schroeder-LawOffice.com

On behalf of Grace C Ross

10 Oxford St., #2R

Worcester, Mass. 01609

February 12, 2025

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