MEMORANDUM AND ORDER PURSUANT TO RULE 23.0
Mary Bishay and Bahig Bishay (together, Bishays)
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appeal from a grant of summary judgment in favor of U.S. Bank National Association (U.S. Bank), authorizing U.S. Bank to foreclose on a property owned by Mary. The Bishays principally argue that U.S. Bank lacks standing to foreclose because it does not hold the original note, which at some point was lost by U.S. Banks agent, and that the mortgage was discharged by operation of the obsolete mortgage statute, G. L. c. 260, § 33. We affirm.
Background. The following facts are undisputed or taken from uncontroverted documentary evidence in the summary judgment record.
Mary is the owner of a property located in Norwood. Bahig is married to Mary and lives at the property. In April 2006 Mary executed a note in the principal amount of $446,250 in favor of H&R Block Mortgage Corporation (H&R Block). The note, a copy of which is in the record, was indorsed in blank. To secure the note, Mary granted a mortgage on the property to H&R Block.
Pursuant to a pooling and servicing agreement (PSA) dated July 1, 2006, certain mortgage loans “identified on the [m]ortgage [l]oan [s]chedule” were transferred and assigned to U.S. Bank. With respect to each such loan, the PSA required delivery of “the original [m]ortgage [n]ote, endorsed in blank or in the following form: ‘Pay to the order of U.S. Bank National Association, as Trustee under the applicable agreement, without recourse.’ ” The mortgage loan schedule identified Marys loan, and the collateral checklist relating to Marys loan indicated that the collateral file contained the original note.
In August 2010 Wells Fargo Bank, N.A. (Wells Fargo), the document custodian for U.S. Bank, released the collateral file to the then loan servicer, American Home Mortgage/Homeward Residential (Homeward Residential). Ocwen Loan Servicing, LLC (Ocwen) acquired Homeward Residential in December 2012 and thereafter became the loan servicer. Several years later, in August 2017, Ocwen performed a diligent search of the file for the original note, but it could not be located. An authorized signer for Ocwen executed a lost note affidavit in October 2017, averring that the original note was lost and that Ocwen could not reasonably obtain possession of it.
Mary defaulted on the note and mortgage in October 2008 and has made no payments since. In May 2018, after U.S. Bank took steps to foreclose on the property, the Bishays filed this action, seeking a declaration that the mortgage was discharged under the obsolete mortgage statute and that U.S. Bank lacked standing to foreclose because it did not have the original note. U.S. Bank counterclaimed for a declaration that it was entitled to foreclose despite the loss of the note. On the parties’ cross motions for summary judgment, the judge ruled for U.S. Bank on all claims and declared on the counterclaim that U.S. Bank holds both the note and the mortgage and may exercise the power of sale under the mortgage.
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After the judge denied the Bishays’ motions for reconsideration, the Bishays filed this timely appeal.
Discussion. The statutory power of sale to foreclose on a property can only be exercised by a “person or entity then holding the mortgage and also either holding the mortgage note or acting on behalf of the note holder.” Eaton v. Federal Natl Mtge. Assn, 462 Mass. 569, 571 (2012). It is uncontested here that U.S. Bank holds the mortgage. The question before us is whether U.S. Bank has established the absence of a genuine issue of fact that it holds the note for purposes of foreclosing on the mortgage,
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entitling it to summary judgment. Our review is de novo. See Chambers v. RDI Logistics, Inc., 476 Mass. 95, 99 (2016).
The enforceability of a lost note is governed by G. L. c. 106, § 3-309 (a), which provides:
“A person not in possession of an instrument is entitled to enforce the instrument if (i) the person was in possession of the instrument and entitled to enforce it when loss of possession occurred, (ii) the loss of possession was not the result of a transfer by the person or a lawful seizure, and (iii) the person cannot reasonably obtain possession of the instrument because the instrument was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service of process.”8
The evidence submitted by U.S. Bank satisfied the first of these requirements, which is the only one in dispute. Because the note was indorsed in blank, it was negotiable by transfer of possession. See G. L. c. 106, § 3-205 (b); Mitchell v. U.S. Bank Natl Assn, 95 Mass. App. Ct. 901, 902 (2019). The PSA, and the accompanying mortgage loan schedule and collateral checklist, show that Marys loan was included in the assignment to U.S. Bank in 2006 and that the collateral file contained the note. Wells Fargo, as U.S. Banks custodian, held the note until 2010 when the collateral file was released to the loan servicer, Homeward Residential. Ocwen then took possession of the collateral file when it acquired Homeward Residential and became the loan servicer in 2012.
These facts establish that U.S. Bank continually possessed the note, through its agents, since 2006 and was therefore entitled to enforce the note when it was lost. The Bishays do not appear to contest that principles of agency apply for purposes of G. L. c. 106, § 3-309 (a). See G. L. c. 106, § 1-103 (“Unless displaced by the particular provisions of this chapter, the principles of law and equity, including ․ the law relative to ․ principal and agent ․ supplement its provisions”). Cf. Terry v. Kemper Ins. Co., 390 Mass. 450, 454 (1983) (provisions of Uniform Commercial Code regarding negotiable instruments did not displace common law agency principles). Instead, their argument seems to be that U.S. Bank was obliged to produce an affidavit from an authorized representative of Wells Fargo or H&R Block confirming that Wells Fargo came into possession of the note in 2006. Such evidence was not necessary, however, for U.S. Bank to meet its burden at summary judgment. “Given the common practice of banks buying and selling loans, ․ it is normal business practice to maintain accurate business records regarding such loans and to provide them to those acquiring the loan.” Beal Bank, SSB v. Eurich, 444 Mass. 813, 819 (2005). Thus, “by presenting evidence of normal business practice,” a bank may rely on its own business records and those of its predecessors to prove the matters addressed therein; it “need not provide testimony from a witness with personal knowledge regarding the maintenance of the predecessors’ business records.” Id. at 816, 819.
Here, the business records produced by U.S. Bank show that the note was conveyed to U.S. Bank in 2006 and then held by Wells Fargo and other agents of U.S. Bank until the time it was lost. The Bishays offered no contrary evidence. See Mass. R. Civ. P. 56 (e), 365 Mass. 824 (1974) (in opposing motion for summary judgment, “adverse party may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial”). U.S. Bank therefore met its burden of demonstrating that there was no genuine factual dispute on the question of possession and that it was entitled to judgment as a matter of law. See Federal Natl Mtge. Assn v. Hendricks, 463 Mass. 635, 642-643 (2012). Cf. Khalsa v. Sovereign Bank, N.A., 88 Mass. App. Ct. 824, 830 (2016).
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U.S. Bank was also entitled to summary judgment on the Bishays’ claim under the obsolete mortgage statute. “The obsolete mortgage statute sets time periods after which a ‘mortgage shall be considered discharged for all purposes without the necessity of further action by the owner of the equity of redemption or any other persons having an interest in the mortgaged property.’ ” Nims v. Bank of N.Y. Mellon, 97 Mass. App. Ct. 123, 126 (2020), quoting G. L. c. 260, § 33. “The statutory period is ‘[thirty-five] years from the recording of the mortgage or, in the case of a mortgage in which the term or maturity date of the mortgage is stated, [five] years from the expiration of the term or from the maturity date, unless an extension of the mortgage, or an acknowledgement or affidavit that the mortgage is not satisfied, is recorded before the expiration of such period.’ ” Nims, supra, quoting G. L. c. 260, § 33. The mortgage in this case states a maturity date of June 1, 2036; thus, it has not been discharged by operation of the statute.
Order entered October 27, 2020, dismissing case affirmed.
Orders entered November 5, 2020, and November 6, 2020, denying motions for reconsideration affirmed.
FOOTNOTES
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. For clarity, we will refer to the Bishays individually by their first names.
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. The memorandum and order on the cross motions for summary judgment states that “[i]t constitutes a final appealable order of the court.” The case was dismissed by order of the court on October 27, 2020.
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. U.S. Bank has not sought in this action to collect on the note, and we do not decide whether it is entitled to do so.
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. The statute further provides that “[t]he court may not enter judgment in favor of the person seeking enforcement unless it finds that the person required to pay the instrument is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument.” G. L. c. 106, § 3-309 (b). The counterclaim and the lost note affidavit in this case contain representations that U.S. Bank or Ocwen would protect Mary against any such loss. The Bishays do not argue that these representations were inadequate to comply with G. L. c. 106, § 3-309 (b).
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. The Bishays’ assertion that U.S. Bank committed fraud on the court and “grand larceny through perjury” is unsupported by the record. U.S. Banks representation to the Land Court in 2010 that it held the note is not inconsistent with its representation in this case that Ocwen discovered in 2017 that the note was lost sometime after Wells Fargo released the collateral file.