Banks Lose Pivotal Massachusetts Foreclosure Case

[irishspirit]

US Bancorp and Wells Fargo & Co. lost a foreclosure case in Massachusetts’s highest court that will guide lower courts in that state and may influence others in the clash between bank practices and state real estate law. The ruling drove down bank stocks.

The state Supreme Judicial Court today upheld a judge’s decision saying two foreclosures were invalid because the banks didn’t prove they owned the mortgages, which he said were improperly transferred into two mortgage-backed trusts.

“We agree with the judge that the plaintiffs, who were not the original mortgagees, failed to make the required showing that they were the holders of the mortgages at the time of foreclosure,” Justice Ralph D. Gants wrote.

Wells Fargo, the fourth-largest U.S. lender by assets, dropped $1.10, or 3.4 percent, to $31.05 at 11:41 a.m. in New York Stock Exchange composite trading. US Bancorp declined 28 cents, or 1.1 percent, to $26.01.

The 24-company KBW Bank Index fell as much as 2.2 percent after the decision was handed down.

http://www.bloomberg.com/news/2011-01-07/us-bancorp-wells-fargo-lose-pivotal-massachusetts-foreclosure-case.html

[Fredkc]

Excellent!!!

[mgray]

The ruling is an important precedent for other state courts in the US. While it does not have to be taken up by another state's judges, they can cite it if they wish. US Bancorp and Wells Fargo really blew it here. The plan was not to let these cases get to a precedent level.
If the bank was on shaky legal ground, the plan was to modify the mortgage at the 11th hour. US Bancorp and Wells Fargo got a little too cocky for their own good.

[Rocky_Shorz]

so any mortgage used to back trust funds can't be foreclosed?

Isn't that just about every mortgage a major bank holds?

[mgray]

so any mortgage used to back trust funds can't be foreclosed?

Isn't that just about every mortgage a major bank holds?

The ruling says that the mortgage servicer -- the entity receiving the monthly payment and paying taxes on the property thru escrow -- cannot bring a foreclosure action unless it has standing. The securitized note owner can grant standing if the original "wet ink" note can be found and assigned to the servicer. And there in lies the problem, these securitized notes were bundled, diced and pushed out by the banks trading desks so quickly that the original "wet ink" doc may be sitting in one of many thousand document warehouses in the US. Hard to follow the paper trail if no one dropped any bread on the trail.

Most mortgages prior to late 2008 were securitized and diced up into many different traunches. I have stories of two investors "owning" the same single-family property through securitized notes.

No one who stands up and fights a foreclosure in the US now will lose their house. The supporting documents are in shambles. Unfortunately many distressed homeowners do not show up in court for the foreclosure hearing because of cost of hiring a lawyer and the judge just signs off on 10-15 decisions in an hour.

Some judges are questioning the first year lawyer who stands at the table filing the paperwork for each decision for the banks.
If this tyro cannot answer the judge's query about knowing what the documents contain the newbie will take the file back and refile later.
He will then move on to the next case.
It is really quite sad that people's lives are turned upside down by these actions.
All they need to do is stand at the other table and request that the judge establish if this bank has standing to foreclose and the process would grind to a halt.