Massachusetts Court Ruling Gums Up Resales Of Foreclosed Homes Across State; Title Insurance Unavailable For Clouded Ownership Due To Faulty Paperwork

In Springfield, Massachusetts, the Boston Herald reports:

• A Springfield judge’s ruling has thrown the entire Massachusetts foreclosure market into disarray by bolstering claims that lenders improperly seized thousands of Bay State homes. Experts say Land Court Judge Richard Long’s recent decision to void two Springfield-area foreclosures over procedural flaws has gummed up resale of foreclosed homes across the state. “It’s just stopped everything,” said North Andover broker Linda Kody, who specializes in reselling foreclosed properties for banks.

• Kody said Long’s ruling, first reported yesterday by industry publication Banker & Tradesman, has halted at least 12 of her resale deals. Would-be buyers can’t get title insurance on homes with “clouded” ownership, Kody said, and banks, in turn, generally won’t OK mortgages without title coverage. Long ruled that due to faulty paperwork, U.S. Bank and Wells Fargo Bank don’t really own the Greater Springfield homes that each foreclosed upon separately in 2007.

• The judge found that the banks held foreclosure auctions even though both lacked documents at the time proving that they really owned the homeowners’ mortgages. That “clouded” each property’s title, discouraging any third party from bidding on the homes, Long ruled.

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• Lawyer Gary Klein, who’s filed a federal class-action lawsuit aimed at undoing some 2,000 Bay State foreclosures on such grounds, said Long’s ruling strengthens his case.(1) “Lenders simply stopped following the law for their own convenience,” Klein said.

For the story, see Court puts legal cloud over foreclosure sales (requires fee; for free version, try here, courtesy of Mortgage Servicing Fraud.org).

Go here for the consolidated court ruling (U.S. Bank v. Ibanez; LaSalle Bank v. Rosario; and Wells Fargo v. Larace), available online courtesy of attorney Glenn Russell, Jr., of the Law Office of Glenn F. Russell, Jr., Fall River, Massachusetts.

See also:

• Judge’s REO Decision Brings Sales ‘To A Halt’ (Realtors in limbo) (requires subscription or purchase),
• Court Says Foreclosure Sales Were Invalid As Banks Didn't Acquire Interest In Delinquent Loans Until After Legal Action Was Completed.

For posts that reference the failure of mortgage lenders and their attorneys to file the proper paperwork when bringing foreclosure actions, Go Here, Go Here, Go Here, Go Here, Go Here, Go Here, and Go Here.

(1) For more on this point, see:

• Thousands Of Foreclosures Are Void, Says Massachusetts Class Action Demanding Lenders & Their Lawyers Prove Note Ownership,
• Thousands Of Unlawful Foreclosures In Mass.? (go here for WBZ-TV Channel 38 video). EpsilonMissingDocsMtg title insurance legal issues