The legal question we asked yesterday “Can Banks Foreclose on Mortgages They Do Not Own?” has now been answered.
No, they cannot — at least not in Massachusetts:
“U.S. 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 transferred into two mortgage-backed trusts without the recipients’ being named.
Joshua Rosner, an analyst at the New York-based research firm Graham Fisher & Co., called the decision “a landmark ruling” showing that at least in Massachusetts a mortgage “must name the assignee to be valid.”
“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 for a unanimous court.”
More next week
Massachusetts Ibanez Appellees Brief to SJC (January 6 2011)
Banks Lose Pivotal Massachusetts Foreclosure Case
Bloomberg, Jan. 7 2011