Sunday, January 09, 2011

Mass. High Court Ruling "A Train Wreck For F'closure Industry" As Banks Slammed In Bay State Beat Down; 'Clouds' Over Title To Homes Darken Statewide

In Boston Massachusetts, The Boston Globe reports:
  • The state’s highest court [Friday] upheld a controversial Land Court ruling that calls into question the ownership of hundreds, possibly thousands, of foreclosed properties in Massachusetts and could affect how foreclosures nationwide are conducted.

  • In a 6-to-0 decision, the Massachusetts Supreme Judicial Court rebuffed the way lenders in recent years have conducted foreclosures — without having all the documentation in place at the time a property is seized. The justices affirmed a 2009 ruling that invalidated foreclosure proceedings involving two Springfield houses because the lenders did not hold clear titles to the properties.(1)

  • “We agree with the [Land Court] judge that the plaintiffs . . . failed to make the required showing that they were the holders of the mortgages at the time of foreclosure,’’ Justice Ralph Gants wrote in the decision.

  • Housing attorneys and state officials said the SJC’s ruling will increase pressure on major US lenders to prove they own mortgages before foreclosing, give homeowners seeking to fight foreclosures additional fodder for legal action, and further stall foreclosures in other states where similar litigation is pending. In cases where there is doubt about whether property was improperly taken, banks might even have to return homes to former owners.

***

  • Boston lawyer Gary Klein, who represents many clients dealing with home foreclosure, called the ruling “a train wreck for the foreclosure industry.’’ [...] The court said yesterday that its ruling applies to all foreclosures in Massachusetts — no matter when they took place — because laws governing proper foreclosure procedures have remained constant over time. “All that has changed is the plaintiffs’ apparent failure to abide by those principles and requirements in the rush to sell mortgage-backed securities,’’ Gants wrote in the decision.(2)

***

  • Officials from the Real Estate Bar Association for Massachusetts said that by not placing a time limit on its ruling, the court has guaranteed a legal traffic jam. “There is a mess of titles out there,’’ said Edward Bloom, president of the association. “There will be a lot more litigation which could have been avoided.’’

For the story, see SJC upends rules on foreclosed properties (Ruling against lenders may have US impact).

See also:

For the ruling of the Massachusetts Supreme Judicial Court, see U.S. Bank Nat’l Ass’n v. Ibanez, No. SJC-10694 (January 7, 2011).

(1) For the 2009 rulings of Massachusetts Land Court Judge Keith C. Long in this matter, see:

(2) Justice Gants' full statement on the retroactive application of this ruling follows:

  • Finally, we reject the plaintiffs' request that our ruling be prospective in its application. A prospective ruling is only appropriate, in limited circumstances, when we make a significant change in the common law. See Papadopoulos v. Target Corp., 457 Mass. 368, 384 (2010) (noting "normal rule of retroactivity"); Payton v. Abbott Labs, 386 Mass. 540, 565 (1982). We have not done so here. The legal principles and requirements we set forth are well established in our case law and our statutes. All that has changed is the plaintiffs' apparent failure to abide by those principles and requirements in the rush to sell mortgage-backed securities.

posted by Home Equity Theft Reporter at 4:08 AM