She claims the loan never made it into the securitization trust in the first place
A Hawaii homeowner claims Bank of New York Mellon spent 18 years trying to foreclose on a loan that never made it into the trust.
Mary Lee Colton filed suit on January 5, 2026 in federal court in New York, and her allegations read like a case study in everything that can go wrong when securitization paperwork does not hold up under scrutiny.
At the heart of the matter is a $346,000 mortgage originated by Countrywide Home Loans in March 2007 and supposedly bundled into the CWABS Asset-Backed Certificates Trust 2007-11. Colton says her loan never actually made it into that trust, and she points to the Pooling and Servicing Agreement's strict conveyance requirements as proof. If she is right, it raises uncomfortable questions for anyone still managing legacy Countrywide paper.
The filing leans heavily on testimony from Edward J. O'Donnell, a former Countrywide executive who reportedly stated that loans with known defects were deemed ineligible for investor sale and simply stayed on Countrywide's books rather than being delivered to RMBS trusts. That kind of testimony has surfaced before in mortgage litigation, but seeing it invoked nearly two decades after the crisis is a reminder that these issues have not entirely faded into history.
Then there is the chain of title problem. Colton alleges that BNY Mellon relied on a 2010 Assignment of Mortgage that was formally rescinded and recorded in Hawaii in 2011. According to her filing, that rescission permanently broke the chain. She also contends the assignment moved the mortgage but not the promissory note, running afoul of Hawaii law that says the mortgage follows the note. For servicers and trustees, this is familiar territory, but familiarity does not make it any less consequential when these arguments gain traction.
Perhaps the most striking allegation involves the 2011/2013 Federal RMBS Settlement, a roughly $8.5 billion deal involving BNY Mellon as trustee along with Bank of America and Countrywide entities. Colton claims that settlement released enforcement rights for covered trusts, including the one holding her loan, yet BNY Mellon filed foreclosure proceedings anyway starting in 2013. Two foreclosure judgments entered against her were later vacated on appeal for lack of authority, she says.
The case has not been decided, and BNY Mellon has not yet responded. Everything in the filing remains an allegation at this stage.
Still, for mortgage professionals watching from the sidelines, the suit is a useful reminder that legacy RMBS exposure has a long tail. Trustees and servicers dealing with pre-crisis securitizations may find themselves defending documentation decisions made nearly 20 years ago. Chain of title defects, rescinded assignments, and questions about proper loan conveyance are not relics of the past. They are live issues that continue to surface in courtrooms.
Colton is seeking at least $350,000 in compensatory damages, along with statutory damages, punitive damages, and an order quieting title to her property.
