Faulty Foreclosure May Mean Massachusetts Buyer Isn’t Owner
Massachusetts’ highest court will consider whether a home buyer can rightfully own a property if the bank that sold it to him didn’t have the right to foreclose on the original owner.
The state’s Supreme Judicial Court, which agreed last month to take the appeal, already ruled Jan. 7 that banks can’t foreclose on a house if they don’t own the mortgage. The lower- court decision now under review said the buyer of residential property in Haverhill, Massachusetts, never really owned it because U.S. Bancorp foreclosed before it got the mortgage.
“It appears to be the next step in the conversation,” Paul R. Collier III, who represented the borrower in the earlier case, U.S. Bank v. Ibanez, said in a phone interview.
Like the Ibanez case, the court’s decision may resonate with other states as they grapple with the rights of new homebuyers who may be hesitant to complete a purchase for fear of uncertain title, and with how such a trend may hobble the broader housing market.
Claims of wrongdoing by banks and loan servicers triggered a 50-state investigation last year into whether thousands of U.S. foreclosures were properly documented during the housing collapse. Last year, completed foreclosures in Massachusetts rose 32 percent to 12,233 from 9,269 in 2009, according to Boston-based Warren Group, which tracks local real estate.
Bundled Mortgages
The latest case, Bevilacqua v. Rodriguez, could affect trusts that bundled mortgages and sold securities to investors. Questions about lending practices, including alleged overstatements of borrowers’ income and inflated appraisals, have pitted mortgage-bond investors against banks. Also, loan originators or trust sponsors may be forced to buy back mortgages wrongly transferred into loan pools.
The Ibanez and Bevilacqua cases both originated before Massachusetts Land Court Judge Keith C. Long in Boston.
Francis J. Bevilacqua III went to Long’s court to force the original owner to say whether he had a claim on the property in Haverhill, about 36 miles (58 kilometers) north of Boston. A city assessment website lists four condominiums at the location with a total value of $600,300.
Bevilacqua asked Long whether he could try to find the original owner through newspaper notices, said his lawyer Jeffrey B. Loeb, of Rich May PC in Boston, in a phone interview.
In August, Long ruled that Bevilacqua wasn’t the property’s owner and didn’t have standing to inquire about claims. U.S. Bancorp, which sold Bevilacqua the property in 2006, conducted an invalid foreclosure because it didn’t properly own the mortgage at the time, Long said.
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This had been a long time coming and it is great to see that Massachusetts courts are holding ‘pretender lenders’ accountable. It is just unfortunate that unsuspecting and innocent home-buyers got caught up in this web of deceit. The title companies that quaranteed these titles were ‘clean’ should be held accountable too…they should make good on their promise and clean up the title mess by paying either the former homeowner or the new after foreclosure homeowner $$$ for the trouble a ‘clouded title’ brings.
Is it likely that the “lien theory” in CA will be positively affected by the MA cases, which MA is a “title theory” state?
~Millie~ (ask Lisa at Foreclosure Hamlet about my case)
It totally blows my mind that someone would even consider buying a foreclosed home today. OMG you would have to be walking around with blinders on or do not listen to the news or just plain stupid. There is a f/c home that has been on the market for 2 years. I would stop by that house an attach a flyers warning that the house was a f/c home so beware. For some odd reason those flyers always came down. Hmmmm. Last summer or early fall as I was driving by I saw two people looking around outside. I decided to turn in and snoop. I asked them if they are buying the property. They didn’t know for sure. I asked them if they checked with the County records to see if the title was clear. They had this blank look on their face. They assumed that “the bank took care of that” was their words. They did not think for one minute that foreclosures could be illegal. The usual, ” well they didn’t pay on the loan”. They had no idea. Just then a realtor came driving up and I was told to leave. While I was leaving I said, ” You better educate yourselves. Check to see of the title is clear before you even think about putting down an offer.” Last month I noticed that there was a sale pending. Whoever is buying that home, I wish them luck.
I tried to explain this result to a guy who stopped me to ask about a foreclosed property on my street. I advised him to make sure there was not a blighted title. He basically refused to believe that the court would give the property back to the original owner. Men. They think they know everything. I am gratified to see this suit and I hope the court gives the property back to Pablo and creates a precedent.
How could any bank have the right to FRAUDCLOSE on anybody when NO NOTES WERE EVER RECORDED? Any “BANK” can come up with a note and say they own it with some FORGERY or ROBSIGNING fraud.
I am not aware of any jurisdiction that statutorily requires notes to be recorded.
There are no jurisdictions that require that one wear a condom. Just like in recording notes, heed not at your peril.