Foreclosures May be Undone by State Ruling

Bloomberg reports that an upcoming ruling in Massachusetts will address the issue of the validity of the alleged transfers of an interest in a mortgage under new banking practices that were developed to facilitate the securitization process.  Too bad it is not a Florida case, but it will be persuasive and a case to watch.  I pulled a few quotes but the article is worth a look.

Read the entire article here.

“The record in this case reflects how mortgage lending changed in recent years and how the industry failed to ensure that its new business model conformed to state law,” Massachusetts Attorney General Martha Coakley wrote in a brief supporting the borrowers.”

“The fight between homeowners and banks before the Supreme Judicial Court in Boston turns on whether a mortgage can be transferred without naming the recipient, a common securitization practice. Also at issue is whether the right to a mortgage follows the promissory note it secures when the note is sold, as the industry argues.

A victory for the homeowners may invalidate some foreclosures and force loan originators to buy back mortgages wrongly transferred into loan pools. Such a ruling may also be cited in other state courts handling litigation related to the foreclosure crisis.”

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