LYNN, Mass. – A federal court agreed last week to delay the foreclosure sale for a Lynn homeowner for six weeks while he negotiates a last-minute troubled loan modification with his lender, Webster First FCU, the central Massachusetts credit union that obtained the mortgage after it acquired Saugus FCU last year.
The court order comes after the homeowner, Marco Medina, filed suit for a temporary restraining order against Saugus FCU and the electronic mortgage registry, known as Mortgage Electronic Registration System, or MERS. MERS, which holds legal title to tens of millions of mortgages on behalf of credit unions and banks, was a critical defendant in this suit because it could proceed with a legal transfer of the property on the say-so of the credit union.
The potential role of MERS complicates the case for both the borrower and the credit union, just as it has for millions of other modifications being negotiated by troubled homeowners. In this case, MERS has been the electronic lien holder as Medina’s mortgage has gone from Ohio Savings Bank, to AmTrust Bank, after it acquired the bank, then Saugus FCU.
The troubled credit union itself was acquired last year by Webster First, one of four recent mergers that brought the fast-growing Worcester-area credit union into the Boston market, complicating the case further.
The homeowner had been renegotiating his troubled mortgage and one for a Danvers rental property with the credit union since a year ago but the credit union refused to accept partial payments on the $312,000 debt until three months of arrears were paid up, according to the suit, which was moved to federal court from state court.
The credit union member said he was notified that without a modification in place the credit union would foreclose on and auction both his properties on April 30 and May 1 and had not responded to his requests to postpone the foreclosures. However, the federal judge agreed to postpone the foreclosure auction until June 14 while the member continues to negotiate a refi.
In his suit, Medina says a delay in the foreclosure will not hurt the credit union because the negotiations for a loan modification “have been positive and payment plans discussed well within his current means.”
