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    Court gives banks 'beat-down' over foreclosures

    January 7, 2011


    NEW YORK (CNNMoney) -- The Massachusetts high court ruled on Friday that two foreclosures are invalid because the banks could not prove they had the proper paperwork to foreclose.

    The banks "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 Supreme Court.

    This could be a harbinger of things to come because it is the first ruling by a state high court on the issue of whether banks can foreclose on homeowners if can't prove they hold the mortgages.

    Numerous instances of this emerged last fall, as evidence appeared that banks were robo-signing foreclosure documents without actually reading them. As a result, there are dozens of similar cases in lower courts across the country, all waiting for the Massachusetts Supreme Court ruling.

    "It's about the most extensive beat-down the banks have received over their shoddy practices," said Christopher Peterson, a real estate law professor at the University of Utah. "It could be a wake-up call for rubberstamping judges that they need to more carefully examine practices."

    Confessions of a robo-signer:

    What's the issue? Mortgage loans are like real property and can only be transferred by physically signing over the paperwork -- like someone endorsing a check or the title to a car -- and delivering it to the next holder. Without that, the holder of record doesn't change.

    Under mortgage securitization, loans get transferred many times after origination before landing in pools of mortgages that are sold to investors. But often times, the banks simply didn't endorse the paperwork between steps.

    Massachusetts law on how to legally transfer mortgages goes back more than 200 years and is very clear, according to Paul Collier, the attorney who represented homeowner Antonio Ibanez in the case. "You've never been able to assign in blank in Massachusetts," he said.

    The high court agreed with that assessment, but also clarified that when banks transfer mortgages into a pool they can establish ownership through proper recording or through a document that states all of the mortgages held in the pool, with addresses and owner names. Although, Justice Grants said, "recording is likely the better practice."

    "The key in either case is that the foreclosing entity must hold the mortgage at the time of the notice and sale in order accurately to identify itself as the present holder in the notice and in order to have the authority to foreclose under the power of sale," he added.

    What happened? Regardless of recording issues, there is little dispute that Antonio Ibanez, a special education teacher in Springfield, Mass., defaulted on his loan for $103,500. He did not even fight the foreclosure when it came in 2007.

    he case only went to trial because the bank needed to establish clear title to the property after foreclosure so it could resell the house. The insurance companies would not issue title insurance on the home without a court ruling.

    The case went before state Land Court Judge Keith Long, who found no evidence that the plaintiffs were the actual mortgage holders and asked them to prove it.

    According to court papers, Ibanez's loan went through five different owners before winding up in a pool of mortgages that U.S. Bank was the trustee for. During that trip down the chain, the parties failed to legally assign the mortgage.

    The bank produced documents that showed that the loan was one of the mortgages put into a pool, but that failed to satisfy the court, which cited "the utter carelessness with which the plaintiff banks documented the titles to their assets."

    In the case of Mark and Tammy LaRaces, Wells Fargo, provided evidence that the loan had been assigned to a pool. The evidence, however, was merely a copy of the pooling and servicing agreement that had been downloaded from the SEC website and was unsigned.

    The state's high court ruled that, in both the Ibanez and the LaRace cases, no valid assignments were made after the lender assigned it to the record holder, Option One Mortgage Corp. in both cases. Option One, therefore, was the mortgage holder at the time of the foreclosures and no one else had the right to foreclose.

    The future: Bruce Allensworth, an attorney for the banks, said they have the records to prove ownership in both cases, but since they were not introduced in Land Court hearing, rules of evidence prevented them from being introduced into the appeal.

    "I'm thinking if there's a way of going back and reintroducing these documents to the Land Court," he said.

    So where does that leave Ibanez and the LaRaces?

    According to Collier, his clients may now own the home free and clear. "I don't see how [the banks] can win if they challenge the decision," he said, "but maybe they'll take a shot."

    8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

    #2
    So, let me get this right. If the bank robo signs and forecloses on you and it can't be proven that they held the mortgage and title of said home at the time of sheriff sale.... then it isn't a valid foreclosure and not only that... if they didn't properly record the transfers between entities correctly, the people (person) behind on that home can be found to own the home "free and clear"? Is that correct? Did I read it wrong?
    My kids better not put my FICO score on my headstone~ (quote by dspii)

    Comment


      #3
      Originally posted by dneil View Post
      So, let me get this right. If the bank robo signs and forecloses on you and it can't be proven that they held the mortgage and title of said home at the time of sheriff sale.... then it isn't a valid foreclosure and not only that... if they didn't properly record the transfers between entities correctly, the people (person) behind on that home can be found to own the home "free and clear"? Is that correct? Did I read it wrong?
      that's what i'm getting from this as well........as maybe i'll be getting our old house back since chase brought it from some fly by night mortgage company....ahhhhhhhh....i couldn't believe my eyes when i saw this...but isn't it interesting that the bank is now stating they have the records..??? but they were not introduced in land court??? what??? and why was that?? i would likely think if one really had the records, that would have been as good as time as any to produce them..wouldn't you? LOL!!
      8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

      Comment


        #4
        lol, yes I would think so. I am wondering about our other house that was foreclosed on.... Sounds to me like the banks think they can cut corners and not do the jobs that we pay for in those high "closing costs".... lol
        My kids better not put my FICO score on my headstone~ (quote by dspii)

        Comment


          #5
          well all i know is we were served with foreclosure papers almost 3 years ago and have no clue why chase will not foreclose...we have tried everything...to no avail...so we are now thinking since chase was really at first only the company "servings" bank for our loan. and at a later date purchased our loan.......from................i don't know?? LOL!!!! we had a friend that knew a friend that knew these brokers...LOL!!! soooooooo...we are at the point that especially, in light of the fact that our mortgage was insured...(PMI) and an FHA...shoot all they have to do is foreclose and collect from the FHA...and they haven't...and we are closer and closer in believing they must simply not have the proper paper work to foreclose.

          because as this judge FINALLY REALLY reviewed the documents, and for the FHA, at least according to them..for a bank to collect the PMI, they must follow the foreclosure process to the letter of the law...and then apply for the loss....interesting!

          we were just laughing about it...saying WE ARE NOT taking back that house...even if they give it to us FREE and CLEAR! no way!! LOL!!!(it needs a ton of work!)
          Last edited by tobee43; 01-08-2011, 03:07 PM.
          8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

          Comment


            #6
            This is where the MERS fraud comes in I think. My lender (Chase) just finally popped up with my partial "wet ink note" last week when they filed to lift to stay Absolutely amazing that I have been in foreclosure and have not made a payment sine October 2008. And poof, they just appeared. Makes me wonder about your case Tobee. Seems like Chase really dropped the ball on yours.
            Filed Chapter 7 October 5, 2010 -341 held Nov. 8, 2010- Report of No Distribution Nov. 12th, 2010- Discharged 1-10-2011 Closed 1-28-2011

            Comment


              #7
              Originally posted by tyson24 View Post
              This is where the MERS fraud comes in I think. My lender (Chase) just finally popped up with my partial "wet ink note" last week when they filed to lift to stay Absolutely amazing that I have been in foreclosure and have not made a payment sine October 2008. And poof, they just appeared. Makes me wonder about your case Tobee. Seems like Chase really dropped the ball on yours.
              yeah me too tyson24...what do you think?? i can only think at this point something MUST be wrong.

              they even called months after our discharge and asked us...now get this...they know we are 1700 miles from the house...but chase contacted us asking us if we wanted to reaffirm the loan....??? what???? yeah, they said WE reopened our loan mod??? what?????

              drop the ball...it a steel cannon ball i think?? LOL!!!
              8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

              Comment


                #8
                One of the very first things that went wrong is that the banks forgot that "do not foreclose" was one of the basic rules of doing business not that long ago...

                I personally know several individuals who were a part of a massive labor strike in the early 1970s that went on for almost a year and none of them had lost their home although they were unable to make the payments during that period of time...imagine that happening today...

                The sad truth is that barely any lender will really work with you today, as numerous stories on this forum and elsewhere prove ad nauseam because "they" really don't need your business, knowing that the government - any government - was "bought and paid for" and will bail them out again and again and again...with our own tax money...

                I'd love to be proven wrong on this one, all jokes aside.

                Good luck to us all.
                No person in their right mind files a Ch. 13 with lien strip pro se. I have.Therefore, please consider me insane and clinically certifiable when reading my posts, and DO NOT take them as legal advice of any kind.Thank you.

                Comment


                  #9
                  Steel cannon ball...wrecking ball LOL It's all the same.

                  So they asked if you wanted to reaffirm? That is crazy. Did they ever lift the stay on you Tobee?

                  They just did that to me and sent me all paperwork on our loan. The weird thing is, my husband's name is on the note they sent but mine is nowhere (but I did sign)

                  We never signed papers with Chase, they assumed or bought our loan from a smaller mortgage company that is now closed. When I look on MERS, that smaller company is not listed anywhere. Only Chase. It's all so strange and I feel like something weird is going on. Like they patched the whole mess together and are going to fly it past the judge at their hearing so they get the stay lifted. They haven't been able to get it together for 2 years and now only half of the paperwork is there. I want the house gone (rental property) so I don't care but it does make me wonder.

                  I feel like in another few years I am going to be like you and the house is still in my name and they have not foreclosed....ugh!
                  Filed Chapter 7 October 5, 2010 -341 held Nov. 8, 2010- Report of No Distribution Nov. 12th, 2010- Discharged 1-10-2011 Closed 1-28-2011

                  Comment


                    #10
                    Originally posted by tobee43 View Post
                    well all i know is we were served with foreclosure papers almost 3 years ago and have no clue why chase will not foreclose...we have tried everything...to no avail...so we are now thinking since chase was really at first only the company "servings" bank for our loan. and at a later date purchased our loan.......from................i don't know?? LOL!!!! we had a friend that knew a friend that knew these brokers...LOL!!! soooooooo...we are at the point that especially, in light of the fact that our mortgage was insured...(PMI) and an FHA...shoot all they have to do is foreclose and collect from the FHA...and they haven't...and we are closer and closer in believing they must simply not have the proper paper work to foreclose.

                    because as this judge FINALLY REALLY reviewed the documents, and for the FHA, at least according to them..for a bank to collect the PMI, they must follow the foreclosure process to the letter of the law...and then apply for the loss....interesting!

                    we were just laughing about it...saying WE ARE NOT taking back that house...even if they give it to us FREE and CLEAR! no way!! LOL!!!(it needs a ton of work!)
                    Tobee, why don't you write them a certified letter that unless they get your name off the Deed, you are going to rent the house out. I know a bit inconvenient, but part of the rent deal could be that the renter fixes up the place a bit, or take it "as is" anything breaks, they fix. It could mean a few bucks and rent it month to month with one month security. 'Hub
                    If I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010.

                    Comment


                      #11
                      We are collecting rent from ours. The $850 is nice, but after the water bill we pay (and it is high) it is just a lot of trouble. I am going to miss the money but not the house. Not a bad idea above though. I know you are in a totally different state now but it would be nice. As soon as you got it all ready to rent, they would finally foreclose.

                      Tobee have you checked MERS? Try it and see if Chase is listed. If not, then something is really up.
                      Filed Chapter 7 October 5, 2010 -341 held Nov. 8, 2010- Report of No Distribution Nov. 12th, 2010- Discharged 1-10-2011 Closed 1-28-2011

                      Comment


                        #12
                        Originally posted by shark66 View Post
                        One of the very first things that went wrong is that the banks forgot that "do not foreclose" was one of the basic rules of doing business not that long ago...

                        I personally know several individuals who were a part of a massive labor strike in the early 1970s that went on for almost a year and none of them had lost their home although they were unable to make the payments during that period of time...imagine that happening today...

                        The sad truth is that barely any lender will really work with you today, as numerous stories on this forum and elsewhere prove ad nauseam because "they" really don't need your business, knowing that the government - any government - was "bought and paid for" and will bail them out again and again and again...with our own tax money...

                        I'd love to be proven wrong on this one, all jokes aside.

                        Good luck to us all.


                        i really agree with you...and the ironic fact that it's OUR own money paying those darn BANKS AGAIN! really is sickening.
                        8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

                        Comment


                          #13
                          Originally posted by tyson24 View Post
                          Steel cannon ball...wrecking ball LOL It's all the same.

                          So they asked if you wanted to reaffirm? That is crazy. Did they ever lift the stay on you Tobee?

                          They just did that to me and sent me all paperwork on our loan. The weird thing is, my husband's name is on the note they sent but mine is nowhere (but I did sign)

                          We never signed papers with Chase, they assumed or bought our loan from a smaller mortgage company that is now closed. When I look on MERS, that smaller company is not listed anywhere. Only Chase. It's all so strange and I feel like something weird is going on. Like they patched the whole mess together and are going to fly it past the judge at their hearing so they get the stay lifted. They haven't been able to get it together for 2 years and now only half of the paperwork is there. I want the house gone (rental property) so I don't care but it does make me wonder.

                          I feel like in another few years I am going to be like you and the house is still in my name and they have not foreclosed....ugh!
                          you know, tyson...i don't even know..they never requested to lift the stay, however, i'm certain it automatically lifted after the discharge...or so i thought.

                          we don't even know the actual name of the company that did give us the mortgage.....only that about 2 months after the chose of the refin chase sent us a letter they were are servicing bank on the mortgage.......then months later another letter saying they purchased the loan. we never rented the property due to liability issues...ponds, pool, other "body" of waters...large grounds and we were too concerned about anyone there...so we emptied the pool...put massive no trespassing signs up surrounding the premises and we had acers...so it was difficult, but this way it was notice to the public to "keep"out...

                          it also has other serious problems...the town changed the curve in the road.......thereby completely changing the existing water table flow......oh it was terrible the last six years we were getting flooded.......and i mean up to almost our knees on the bottom level of the house...it caused so my damage...and black mold, flooded the leech fields, over flew the septic system. we were living with sub pumps and prayer and knew were in a catch 22 but just keep thinking the water would again someday stop.

                          we were really dealing with it...tried to get enough money up to get a huge french drain it would have been about 50k, plus the leech fields...new septic...it was a mess and we expected to really honestly deal with legally as well...(which we had already spent thousands on atty's fees about the situational...) of course we loved our home and were doing everything to save it, both from the banks and the change in "nature" caused by man. i worried also, that most likely we would never be able to sell the place because of all the problems the house had and would never pass any inspections....

                          so at this point really, we don't if it's all the problems that we have learned to deal with that may also be why the bank is NOT selling it...or if, the paperwork is a problem OR both????

                          also, since we are figuring there is a statue of limitation on just about everything other than murder....that may be a way in the future to get our names taken off the deed...but like i said we don't really care anymore, once chase changed the locks...put the signs up, we no longer had or have access to even enter the property!
                          Last edited by tobee43; 01-09-2011, 06:55 AM.
                          8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

                          Comment


                            #14
                            Originally posted by AngelinaCatHub View Post
                            Tobee, why don't you write them a certified letter that unless they get your name off the Deed, you are going to rent the house out. I know a bit inconvenient, but part of the rent deal could be that the renter fixes up the place a bit, or take it "as is" anything breaks, they fix. It could mean a few bucks and rent it month to month with one month security. 'Hub
                            ahhhhhhhh hub, wish so...we had another piece of property we foreclosed with a mortgage on it...i sent both banks certified letters with warranty deed and a general release signed by us....so they could jump ahead...one bank immediately responded and went for it...but chase...didn't budge...we have sent them 4 certified letters as well as cc'd their representing attys...nothing...

                            ahhhhhhh....NO...because of all the water spots on the premises we would not rent. i would be way too worried. you and i have a bit in common in a "different" way than you WILL..(LOL!) know about...

                            but really now thinking about it....wow....that could be a legit threat hub!!!

                            so you think i can have someone change the locks back??
                            Last edited by tobee43; 01-09-2011, 07:32 AM.
                            8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

                            Comment


                              #15
                              Originally posted by tyson24 View Post
                              We are collecting rent from ours. The $850 is nice, but after the water bill we pay (and it is high) it is just a lot of trouble. I am going to miss the money but not the house. Not a bad idea above though. I know you are in a totally different state now but it would be nice. As soon as you got it all ready to rent, they would finally foreclose.

                              Tobee have you checked MERS? Try it and see if Chase is listed. If not, then something is really up.
                              no tyson!!! good idea..... i will and see if i can get up the house! i know it's not listed in our sheriff's office for foreclose sale as yet.

                              ps...checked it, it's there so what the heck??? says it's active....but i had contacted the FHA and they said no claim has been put in, however, for them, they said chase must got through the foreclosure process....i just don't have a clue.
                              8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

                              Comment

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