Lots of talk online as to whether other states like California, which like Massachusetts, also operates under a non-judicial foreclosure system, are going to follow the lead of Friday's Massachusetts Supreme Court ruling. The court has a stellar reputation, and that's going to hold weight on a lot of other judicial circuits:
NEW YORK, Jan 7 (Reuters) - In a decision that may slow foreclosures nationwide, Massachusetts' highest court voided the seizure of two homes by Wells Fargo & Co (WFC.N) and US Bancorp (USB.N) after the banks failed to show they held the mortgages at the time they foreclosed.
Bank shares fell, weighing on broader stock indexes, on fears the decision could threaten lenders' ability to work through hundreds of thousands of pending foreclosures.
The Supreme Judicial Court of Massachusetts' unanimous decision on Friday upheld a lower court ruling. It is among the earliest cases to address the validity of foreclosures done without proper documentation.
That issue, including the use of "robo-signers" who approved foreclosure documents without reviewing them, last year prompted an uproar that led lenders such as Bank of America Corp (BAC.N), JPMorgan Chase & Co (JPM.N) and Ally Financial Inc to temporarily stop seizing homes.
"A ruling like this will slow down the foreclosure process" for lenders, said Marty Mosby, an analyst at Guggenheim Securities in Memphis, Tennessee. "They're going to have to be really precise and get everything in order. It doesn't leave a lot of wiggle room."
Wells Fargo and U.S. Bancorp lacked authority to foreclose after having "failed to make the required showing that they were the holders of the mortgages at the time of foreclosure," Justice Ralph Gants wrote for the Massachusetts court.
In a concurring opinion, Justice Robert Cordy lambasted "the utter carelessness" that the banks demonstrated in documenting their right to own the properties.
Courts in other U.S. states are considering similar cases, and all 50 state attorneys general are examining whether lenders are forcing people out of their homes improperly.
Friday's decision applies in Massachusetts, and need not be followed by federal judges or by courts in other states.
This is going to mean a HUGE legal mess for a lot of people in the Bay State -- except homeowners facing foreclosure, who will get to hit the reset button.
Mortgage companies who lent money to buyers purchasing foreclosed homes with this type of title defect, and the title insurers on those deals? Not so good. (By the way, the decision was applied retroactively.)
If you bought a foreclosed home that has this kind of title issue, you no longer own your home. The previous owner still does. If you don't have title insurance, you're doubly screwed. You probably can't sell or get an equity loan for a long, long time. You can sue the banks, or the attorneys, or try to get the owner to sign over the deed. If you do have title insurance, you can file a claim. Go find a good lawyer.
A tiny bit of wiggle room in the ruling means some mortgages with proper documents may survive.
We're going to see a lot of class action suits against the banks the lawyers who were supposed to draft the documents, and the foreclosure attorneys. Most interesting of all, the investors of mortgage backed securities will be looking to sue the mortgage trusts -- and the companies that were servicing the pools.
This means public pension funds have at least a ghost of a chance of getting their money back.
What happens when 50-million people learn they defrauded by the banks creating illegal loans - defrauded by the courts by allowing the corrupt banks to illegally foreclose a loan no-longer secured by the property - betrayed by their courts & gov who KNEW this was happening and simply looked the other-way while these families are tossed to the street...
As it stands - it is literally impossible for the courts to know if those families were sold legal loans. These families do not yet realize they were lied to & misrepresented by the banks.
Nightmare On Wall-Street - L. Randall Wray wrote
"Returning to the question -- why would the banks do this? To understand why, you've got to think like a criminal -- that is, like what my colleague Bill Black calls a "control fraud". That leads to a rephrasing of the question: Why would those who control a bank engage in risky and fraudulent activity that is sure to destroy the bank?
The answer, then, is obvious: Because those running the control fraud have no interest in the bank as a going concern -- they are simply looting the institution, running it to maximize their own individual take. They get their bonuses and then jump a sinking ship -- and with luck they move directly into Treasury to arrange bail-outs to let the other rats on their Titanic suck whatever blood remains after the transfusions."
http://www.huffingtonpost.com/l-randall-wray/post_1564_b_807877.html?view=print
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