Content By: The Coming Depression Editorial Staff (dates cited below)
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“What they were doing was peddling these mortgages and leaving the paperwork behind,” said Michael Pill, a real estate partner at Green, Miles, Lipton & Fitz-Gibbon LLP in Northampton, Massachusetts who is not involved in the case.The Massachusetts court rejected a request by the banks to apply the decision only in future cases, leaving homeowners already foreclosed upon without a remedy. “

The consequences of this problem could be a small hiccup or a banking disaster. The fraudulent signature scenario is the hiccup scenario in our estimation, but if the banks have lost the original loan documents either from the mortgage securitization process or at the time when they took over defunct mortgage lenders such as Washington Mutual and Countrywide, it could lead to a disaster scenario. Not only will the 100,000 per month foreclosures grind to a halt, but we could have former homeowners who were foreclosed on suing and winning back their homes mortgage free! Even just the attempt by hundreds of thousands to win back their homes as well as class-action lawsuits will be problematic for the big banks in the US.

This fraud is so rigged that before American politicians were screaming about the fraud, because their voters were screaming very loud about it, mortgage foreclosures permitted this massive fraud – court approved foreclosure on houses that never had a mortgage, bought in pure cash, owned outright. Total theft, fraud, robbery.

Expect a total loss to the American banking sector of 600 trillion dollars. Think about that. 60% of the way to ONE QUADRILLION DOLLARS. WIPED OUT. TO ZERO. It will happen just about overnight and before it does the media will talk everything up like sunshine and rainbows are about to grow from everyone’s crops and through every office window. Then it’s all gone.

The foreclosure in 95% of the cases are legitimate and inevitable. The technical legal problem here is the person signing off was rubber stamping the work done by his/her subordinate. Each case had to be reviewed by the signer. This obviously is an industrywide practice and understandable given the caseload. The banks lose out while the homeowners will be getting more free-rent time in the house. This will only prolong the duration of the housing slump in the US which is actually how the banks will be hurt the most.

Banks lose key foreclosure ruling in top Massachusetts court by Reuters (1)

In a decision that may slow foreclosures nationwide, Massachusetts’ highest court voided the seizure of two homes by Wells Fargo & Co and US Bancorp after the banks failed to show they held the mortgages at the time they foreclosed.

Bank shares fell, weighing on broader stock indexes, on fears the decision could threaten lenders’ ability to work through hundreds of thousands of pending foreclosures.

The Supreme Judicial Court of Massachusetts’ unanimous decision on Friday upheld a lower court ruling. It is among the earliest cases to address the validity of foreclosures done without proper documentation.

That issue, including the use of “robo-signers” who approved foreclosure documents without reviewing them, last year prompted an uproar that led lenders such as Bank of America Corp, JPMorgan Chase & Co and Ally Financial Inc to temporarily stop seizing homes.

“A ruling like this will slow down the foreclosure process” for lenders, said Marty Mosby, an analyst at Guggenheim Securities in Memphis, Tennessee. “They’re going to have to be really precise and get everything in order. It doesn’t leave a lot of wiggle room.”

Wells Fargo and U.S. Bancorp lacked authority to foreclose after having “failed to make the required showing that they were the holders of the mortgages at the time of foreclosure,” Justice Ralph Gants wrote for the Massachusetts court.

In a concurring opinion, Justice Robert Cordy lambasted “the utter carelessness” that the banks demonstrated in documenting their right to own the properties.

Courts in other U.S. states are considering similar cases, and all 50 state attorneys general are examining whether lenders are forcing people out of their homes improperly.

Friday’s decision applies in Massachusetts, and need not be followed by federal judges or by courts in other states.

Nonetheless, “it will be certainly cited as persuasive authority by anybody in a similar scenario who’s trying to hold onto his home,” said Robert Nislick, a real estate lawyer at Marcus, Errico, Emmer & Brooks PC in Braintree, Massachusetts.

LEAVING PAPERWORK BEHIND

Analysts said the decision may also raise the specter that loans transferred improperly will need to be bought back.

References:

Reuters

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