Massachusetts Judge Rules Against Wells Fargo and U.S. Bank – Threatens Millions of Foreclosures
This is starting to get interesting, at least for those living in a judicial foreclosure state.
(NOTE: In my original posting of this article last Massachusetts is apparently a non-judicial foreclosure state. A reader pointed this out the day after I wrote this article. As a result, this ruling may apply to foreclosures in California if California courts adopt the reasoning Judge Keith Long used in this case.)
Massachusetts Land Court Judge Keith Long has refused to reverse a ruling that opens up the very real possibility that tens of thousands of foreclosures in the state, dating as far back as 1989, could be invalidated. The judge denied a request made by Wells Fargo and U.S. Bank to reinstate two foreclosures that he had invalidated last March because of problems with the paperwork presented by the banks.
As reported by Jerry Kronenberg in the Boston Herald this morning:
“The foreclosure sales (in question are) invalid because they failed to meet the requirements of (Massachusetts law),” Land Court Judge Keith Long wrote yesterday in reaffirming a decision he originally reached in March.
It should go without saying that the banks were very unhappy with the ruling.
“The judge has thrown into question every foreclosure performed in the Commonwealth over the last 20 years,” said lawyer Lawrence Scofield, who represents both Wells Fargo and U.S. Bank.
And Scofield may just be right, darn the luck. It may just be that the lenders and servicers won’t be able to continue foreclosing without being able to prove chain of title.
The core issue has to do with filings that banks are required to make any time they sell a mortgage to a new investor… filings they neglected in hundreds of thousands if not millions of instances, as mortgages changed hands more times than the penny I have in my pocket. Judge Long ruled that a bank cannot foreclose on a home unless it can present the documents that show who owned the mortgage each time the loan changed hands.
The judge also said that fixing the documents after the fact, which is what Wells Fargo and U.S. Bank did in the case he was ruling on, isn’t kosher, and I can’t believe that Wells or U.S. Bank would think that fixing things after the fact would be okay.
In Kronenberg’s article, he quoted Judge Long who wrote:
“The issues in this case are not merely . . . a matter of dotting i’s and crossing t’s. Instead, they lie at the heart of the protections given to homeowners and borrowers.”
Bravo, Judge Long!
Many attorneys and other experts have weighed in on Judge Long’s decision, saying that it will make it possible for thousands of people that have lost homes to foreclosure to challenge those foreclosures and potentially have them reversed. The only foreclosures that would be out of bounds would be those that occurred before 1989, per the state’s statute.
But, the ruling affects homeowners who have bought foreclosed properties, as well, as they may find the homeowner who owned the house previously coming back to sue to have it invalidated. And that may make it difficult for those who have bought a foreclosed home to sell it or refinance it, because of titles that the courts will likely see as being “clouded”. According to Kronenberg, some homeowners who have bought foreclosed homes have already been unable to get mortgages or obtain insurance as a result of Judge Long’s ruling.
Scofield, the lawyer representing the banks in this case makes the case that the Judge’s ruling will push the economy deeper into its recession, which is exactly what I’d expect a bank attorney to say.
However… Memo to Mr. Scofield: It’s your clients and their pals on Wall St. that caused this recession you’re now so worried about. And if you want to see it end, the answer isn’t to allow banks to fail to comply with the law… the answer is for the banks to stop foreclosing and start modifying in earnest those mortgages on which they’re now foreclosing. Like they said they would, remember?
Here’s a link to Kronenberg’s article in the Boston Herald: