Margaret J. Aho

1
UNITED STATES BANKRUPTCY COURT
DISTRICT OF MASSACHUSETTS
In re: 	)
)
MARGARET J. AHO, 	) 	Chapter 13
) 	Case No. 09-41949-JBR
Debtor. 	)
____________________________________)
MEMORANDUM OF DECISION
This matter came before the Court on the Amended Objection of debtor Margaret Aho
(“Aho”) to Claim #3 of U.S. National Bank Association (“U.S. Bank”) [docket # 29] and U.S.
Bank’s Response [docket #36] thereto. A hearing was held on September 29, 2009, before and
after which the parties filed documentation and memoranda in support of their positions.
U.S. Bank holds a mortgage on Aho’s home, located at 20 Bertha Avenue in Gardner,
Massachusetts. On July 14, 2009, U.S. Bank filed a Proof of Claim in the amount of
$162,671.14. This total included, among other things, fees and expenses of $2,757.00 which
U.S. Bank later claimed were incurred prepetition, “in connection with the borrower’s default.”
Response to Amended Objection to Claim at 3 [docket #36]. Specifically, most of the costs were
incurred in U.S. Bank’s preparation to foreclose on Aho’s home.
Aho does not, and indeed could not, dispute that under the terms of her mortgage
agreement with U.S. Bank, reasonable fees and expenses incurred by the lender as a result of the
borrower’s default are to be added to the total balance due. Instead, Aho argues that a certain
portion of U.S. Bank’s claim, specifically $2,685.47, is unreasonable, and thus must be borne by
U.S. Bank and not added to the secured obligation. This Memorandum will address the
reasonableness of specific fees and expenses sought by U.S. Bank.
Auctioneer Fee
U.S. Bank claims an “auctioneer fee” in the amount of $550.00, and Aho responds that
this fee is unreasonable because no auction was ever held. At the hearing, U.S. Bank attested
that the auctioneer fee “was incurred in connection with scheduling the auction and arranging for
the publication.” Official Tr. at 17 [docket #39]. Supposedly in support of that proposition, U.S.
Bank submitted an invoice from an auction company with a single item, reading “SALE
CANCELLED 20 BERTHA AVE GARDNER, MA NO AD,” at a price of $550.00. Ex.
Invoices [docket # 42]. The Court does not rule out the possibility that an auctioneer could
reasonably charge that amount or more for preparatory work in anticipation of an auction, and
that, even if the auction did not go forward, such a fee might reasonably be chargeable to the
bankruptcy estate. But in the instant case, the evidence suggests that little or no work was
actually done by the auctioneer, and U.S. Bank failed to adduce any evidence or explanation that
would contradict that suggestion. Therefore, the auctioneer fee of $550.00 is disallowed.
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1 However, this requirement can be circumvented, in circumstances specified by the
statute, by agreement of the parties. See 50 U.S.C. § 533(c)(1).
2
Assignment Recording Fee
U.S. Bank also claims a recording fee of $75.00 for an assignment of the mortgage
between U.S. Bank and another entity, Mortgage Electronic Registration Systems, also known as
MERS. MERS was the original mortgagee, as nominee for the the original lender, Credit Suisse
Financial Corporation. See Mortgage, Ex. 1 to Resp. to Amended Objection to Claim at 1
[docket #36]. U.S. Bank claims that this fee was appropriately charged to Aho under the terms
of the mortgage and note, because it was incurred in the process of “obtaining a clear chain of
title.” Official Tr. at 16 [docket #39]. The Court finds this fee patently unreasonable and
bordering on outrageous. If a mortgagee chooses to transfer its interest in a mortgage to another
party, in a transaction that clearly benefits no one but the mortgagee, it is unreasonable to ask the
mortgagor to pay to undo that transaction once it no longer stands to benefit the mortgagee. To
suggest that the mortgagor should bear the expenses of the transfer of mortgages in this
convoluted syndication world is laughable. The assignment recording fee is disallowed.
Title Examination
U.S. Bank claims a total of $425.00 for title examination fees. In support, it submits an
invoice listing two items: a “Two Owner Title Rundown,” costing $300.00, and a “29 Day
Rundown,” costing $125.00. Ex. Invoices [docket #42]. These fees were incurred on February
12, 2009, and May 14, 2009, respectively. Resp. to Amended Objection to Claim, Ex. 4 [docket
#36]. Considering that Aho is the sole owner of her home, it is unclear why a “two owner”
rundown would be reasonable. The Court must infer that this two-owner approach was applied
to the second title rundown as well as the first. In the absence of any further evidence supporting
the title examinations’ reasonableness, the Court must disallow half of the $425.00, or $212.50,
as duplicative and unreasonable.
Unspecified Professional Services
U.S. Bank claims $440.00 for “Professional Services,” as the expense is titled in the
invoice it submits. Resp. to Amended Objection to Claim, Ex. 4 [docket #36]. Absent more
detail, it is unreasonable for Aho’s estate to pay for this expense. The fee for unspecified
professional services is disallowed.
SCRA Action
Aho’s remaining objection to U.S. Bank’s claim concerns a proceeding U.S. Bank
brought in Massachusetts state court to obtain an order stating that Aho was not in active
military service. This procedure is very common in Massachusetts as a means of ensuring
compliance with the federal Servicemembers’ Civil Relief Act (SCRA), 50 U.S.C. § 502 et seq.,
which invalidates foreclosures on servicemembers’ homes unless a “court order” authorizing the
foreclosure has issued.1 50 U.S.C. § 533(c)(1). An uncodified but still effective Massachusetts
statute (hereinafter the “Massachusetts SCRA statute”) provides a procedure for obtaining such a
court order in Massachusetts state court. See St. 1943 Mass. Acts and Resolves 50-52.
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2 US Department of Defense, SCRA Web Site, https://www.dmdc.osd.mil/appj/scra/
scraHome.do (last visited November 16, 2009).
3
In this case, U.S. Bank brought an action in the manner prescribed by the Massachusetts
SCRA statute prior to foreclosing on Aho’s home, obtained the “court order” described by the
federal statute, and later included in its Proof of Claim the costs incurred in bringing the action.
Aho responds with a novel argument that it is unreasonable to charge her estate the costs of
bringing the SCRA. In its most persuasive iteration, Aho’s argument is that U.S. Bank could
have easily obtained proof that Aho was not a servicemember, either by asking her to execute an
affidavit to that effect, or by entering her information into the free Department of Defense
website, which provides updated information on any individual’s military service.2 If, Aho
argues, U.S. Bank could have obtained such proof that Aho was not a servicemember, it was
unreasonable to charge her estate to obtain a court order which had no legal effect unless Aho
were a servicemember.
Although Aho’s intriguing argument may merit further attention in other fora, such as the
Massachusetts legislature, the Court is not prepared to denounce actions under the Massachusetts
SCRA statute as unreasonable. Cases and trusted practice guides interpreting Massachusetts law
suggest that an SCRA action is an advisable prerequisite to any foreclosure, and that suggestion
is sufficient to satisfy the reasonableness inquiry currently before the Court. See, e.g., Silva v.
Massachusetts, Nos. 08-1956, 08-2559, 2009 WL 2902712 at *1 n.2 (1st Cir. 2009) (“[T]here
would remain a cloud on [the foreclosing mortgagee’s] title until she filed suit to establish that
neither [mortgagor] was entitled to relief under the federal statute”) (citation omitted); Lynn Inst.
for Sav. v. Taff, 314 Mass 380, 386 (1943) (“It is only by proceeding under the [SCRA’s
precursor] that a mortgagee [can] be certain that the foreclosure of his mortgage will not be made
in violation of the act.’”) (second alteration in original) (quoting Hoffman v. Charlestown Five
Cents Savings Bank, 231 Mass. 324, 329-29 (1918)); 28 Massachusetts Practice, Real Estate
Law § 10.4 (4th ed.) (describing the Massachusetts compliance statute as establishing “a court
procedure to determine that no one interested in the property is in the military service,” without
suggesting that other, cheaper means are available to do so). Therefore, Aho’s objection to costs
incurred by bringing the SCRA action is overruled.
Conclusion
In accordance with the foregoing, Aho’s Objection is SUSTAINED to the extent of
$1,277.50 and U.S. Bank’s Proof of Claim is ALLOWED in the amount of $161,393.64. The
debtor is directed to file a second amended Chapter 13 plan consistent with this decision.
A separate order will issue.
Dated: November 16, 2009 	______________________________
U.S. Bankruptcy Judge
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