A monumental ruling by a Judge in Massachusetts this week, will now change how banks foreclose on properties. Banks will now need to prove they own the mortgage, before they can foreclose on it.

On July 5, 2007, U.S. Bank foreclosed on the mortgage of Antonio Ibanez, and bought his house in Springfield, Mass., at auction. The same day, Wells Fargo foreclosed on Mark and Tammy LaRace.

Selling a house the bank cannot prove it owns makes the sale "void," was the decision by Massachusetts Supreme Court Judge Ralph D. Gants. That means the banks in the case, U.S. Bancorp and Wells Fargo, had no legal right to foreclose on the two homeowners who brought the case. http://cdn.americanbanker.com/media/pdfs/IbanezSJCOpinion.pdf

What came out in court records was neither bank had the documents to prove that it owned either loan, giving the banks power to foreclose. Instead, the bank submitted hundreds of pages of documents showing how the mortgages passed from the original mortgage broker all the way down to the bank investors who eventually came to own them. Passing mortgages from one owner to the next showing the general intent of everyone involved, is now proving not to be enough for banks to prove ownership, which has been the continuous argument of banks up to this date.

"The issues addressed by the court revolved around the process of servicing the loan on behalf of the securitization trust, which was performed in this case by the servicer, American Home Mortgage," US Bancorp said.

While this ruling involved two major banks, it may be inevitable that some financial institutions will go under as a result...time will tell.

 

Copyright © AK Debt Solutions 2011 - Judge Rules Foreclosures Invalid Due to Botched Paperwork 

Angela Kelly

Principal/Sr. Debt Analyst

1-855-GUIDING

 

2 Comments on Judge Rules Foreclosures Invalid Due to Botched Paperwork

JAN
14
2011
575,820 Points 15 Featured Posts Localism Sponsor Outside Blog Hit Router Attended Rain Camp Called Shot Master

Angela - Interesting ruling - I am amazed at the lack of responsible record keeping with banks. 
2:39pm • #1

It's amazing Courtney! I have had the opportunity to help clients with they're modification process and have run into this lack of organization over and over again. The "right hand" doesn't seem to know what the "left hand " is doing!

I'm confident this ruling will help many more distressed homeowner's stay in their homes, until a proper loan modification can be worked out or short sold.
2:48pm • #2


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Angela Kelly Your Credit Repair Expert

Sacramento, CA

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