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Mass. court rules against banks in pivotal mortgage case
By Denise Lavoie-Associated Press3:32 p.m., Friday, January 7, 2011BOSTON (AP) The highest court in Massachusetts ruledagainst U.S. Bancorp and Wells Fargo & Co. Friday in a widely watchedmortgage foreclosure case that could have serious implications for the nation's largestbanks.The Supreme Judicial Court affirmed a lower court judge's ruling invalidating twomortgage foreclosure sales because the banks did not prove that they actually owned themortgages at the time of foreclosure.Last fall, the banking industry's foreclosure machine came under intense scrutiny with therevelations that low-level employees called "robo signers" powered through hundredsof foreclosure affidavits a day without verifying a single sentence. At the time, analystswarned that the banks' allegedly fraudulent document procedures could imperil theirability to prove that they owned the mortgages.The Supreme Judicial Court found that the banks, who were not the original mortgagees,did not make a required showing that they held the mortgages at the time of foreclosure.As a result, the court found, the banks did not demonstrate that the foreclosure saleswere valid to convey title to the properties."We agree with the judge that the plaintiffs did not demonstrate that they were theholders of the ... mortgages at the time that they foreclosed these properties, andtherefore failed to demonstrate that they acquired fee simple title to these properties bypurchasing them at the foreclosure sale," Justice Ralph Gants wrote for the court in theunanimous 6-0 ruling.Attorney Paul Collier III, who represents Antonio Ibanez, one of the homeowners in thecase, said the ruling affects thousands of mortgages in Massachusetts and could have afar-reaching impact on the nation's banking industry."For homeowners and foreclosures in general, it means that anymortgage foreclosure which was initiated by a securitized trust at a time when the trusthad not obtained a mortgage assignment which gave it the lawful right to do so is void.Those homeowners, like Mr. Ibanez, still own the property," Mr. Collier said.The banks argued that securitization documents they submitted were sufficient to prove
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