Bankruptcy

Recent Case:Bank?s Have to Prove Legal Right to Foreclose, Before They Foreclose

By mcbride

This should not be such an important decision.  The fact that it is heralded as important shows how little is expected from banks in the way of legal documentation for their claims.  Thus far into the great real estate melt down, banks may have been able to get away with little or no proof that they actually own the mortgage upon which they are foreclosing.  This may be changing.  The issue of documentation has been an issue in Bankruptcy Courts where mortgage companies have filed proofs of claim with inadequate documentation to prove actual ownership of the loan.  The reason for this problem is simple: the mortgages have been bundled and re sold and then there is often another sale or two to the entity which is now attempting to assert its claim. 

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

Bank shares fell, dragging down the broader stock market, after the Supreme Judicial Court of Massachusetts on Friday issued its decision, which upheld a lower court ruling.

The unanimous decision is among the earliest to address the validity of foreclosures done without proper documentation. That issue 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.”

Here is a link: http://www.reuters.com/article/idUSTRE7063M620110107?feedType=RSS&feedName=businessNews

Michael

Full post as published by Texas Lawyer Blog on January 07, 2011 (boomark / email).