Thousands of foreclosures are invalid: Ibanez decision

this is a poorly reasoned, poorly written decision that attempted on it's face to be consumer advocate but had a blatantly obvious unintended consequence of making the foreclosure process slighly more cumbersome but vastly more expensive. invalidating a foreclosure does not bring a mortgage current. so you have the wonderful consequence of starting the procedure over again. i have a difficult time believing the desicion will not be overturned and buried w/ other well intended but ridiculous doctrines. life tenure has its benefits. the decision also has little importance to the overwhelming majority of lay people except to incite needless fear. homeowners policy plus malpractice protection is a decent buffer.

We just bought a foreclosure and I am thanking my lucky stars that we bought owner title insurance!

It's about time the courts caught up with this paperwork mess. The lenders should not be immune from following the recording laws. It's absolutely unacceptable that they think they can foreclose without proving they have title. Ridiculous. This WILL be a mess of mammoth proportions, but I hope this judge's reasoning prevails.

This is what I call "welfare for lawyers." They're the biggest beneficiaries of this.

still waiting, that's an absurd comment. You think someone should be able to take title to your house without even proving they have a lien on it? So it's OK for banks to foreclose on the wrong house (happened), or for servicers to foreclose on behalf of the wrong securitization trust (happened, leaving the former homeowners vulnerable to the real investor coming along later)? It's OK for a foreclosure buyer not to even know who the current owner is?

There is absolutely no excuse for lenders' carelessness. Notes are supposed to be held by professional custodians who offer fancy document management systems and secure filing facilities. Rather than use them, banks got into the habit of filing lost note affidavits like they were candy. If you lose your paperwork on a regular basis, or if you forget to follow simple legal procedures daily, you shouldn't be a financial institution. It's not the court's responsibility to do your job for you at taxpayer expense. Sorry.

"welfare for lawyers" is spot on Susan. This will merely delay the price discovery process some more, but inevitably these properties will be foreclosed on. The smart banks in this cycle will foreclose early and often and dump their REO asap. The longer they wait, the more painful it will be...

"Welfare for lawyers?" So working 80 hours a week for your paycheck means you're getting a handout. Riiiiiight.

Look, there will be paperwork and the process will surely cost banks more and delay purchases. But as a homeowner, I absolutely want banks to follow the darn laws, follow their own contracts, and behave *ethically* while they are working to kick someone out and take the house.

Ibanez seems like a reasonable decision. Yes, it will make foreclosure harder for the banks, but that complication should have been anticipated, and factored into the costs, when the banks securitized the mortgages in the first place. There's a reason the government records deeds and titles: so it's clear to everyone who owns a piece of property. And if you're not the owner on record, or if the leinholders on record don't assent, you can't sell the property.

Suppose my parents own their house outright, and we sign a contract that transfers ownership to me, but we never file anything with the registry of deeds. Would I be allowed to sell that house to someone else? Of course not, first I'd need to establish that I own the house. Why should the rules be different for banks?

I agree with the posters who say banks need to act on more foreclosures, so the market can be somewhat liquid again. But allowing transfer of property without proof of ownership goes too far.

I think there is some confusion about what must and may be filed with the Registry. And what is the purpose of the Registry. I think it would be helpful if Attorney Vetstein would clarify.

Have you ever taken out a mortgage? Lawyers are paid a straight fee on each task they do. The Lienholder is the one not doing their "due diligence". I purchased a house and all liens had to be accounted for and closed. A title search was done. All aspects had to be covered. This is the law. BANKS and Mortgage lenders have used this for years to jack up fees and to make the average buyer jump through their hoops. Now god forbid they be asked to actually do the same paperwork that we have to!!!! This is the law and has been for decades (perhaps centuries). Missing paperwork filings are supposed to be exceptions and when they are done on the behalf of a buyer they have to be complete and researched. Why not for BANKS and mortgage lenders. Any person arguing this is superflous is like the CEOS of the tobacco companies saying tobacco is not addictive. All the court said here is that banks have to follow the same rules everyone else does

This is a lawyers dream. This is also helping the housing market in Massachusetts because it is slowing down the foreclosure process and it is taking longer for these homes to hit the market.

The banks were too busy making all this money, they forgot how to properly process paperwork.... what a shame! Too bad, now they have to go back and do it correctly before foreclosing.

I think the explanation of the case is a little misleading. The opinion does not hold that an assignment of a mortgage must be recorded before a foreclosure sale takes place. Rather, the opinion simply holds that the foreclosing party must have been assigned the mortgage or be the agent of the holder of the mortgage as of the date of the foreclosure sale. (Generally, this is considered an issue of "standing" -- a party needs to have a present interest in the controversy.) Thus, checking the Registry of Deeds for a recording does not really have any bearing on whether the party bringing the foreclosure action is the proper party.

Here's why I think this is welfare for lawyers. Lawyers will now go looking for or be sought out by people who feel they may have been or are being foreclosed upon in violation of this ruling. Those people probably can't pay a lawyer, given they are losing or have lost their homes. The lawyers will take these cases on a contingent fee basis. When all is said and done and the cases are settled, the plaintiffs will end up with a couple of thousand dollars while the attorneys and court reporters and other industries supporting the litigation process will benefit the most. I just don't see this saving anyone's home. I see it as an expensive way to iron out a technicality that will still lead to foreclosure.

Susan, a homeowner facing foreclosure is a defendant in the action, not a plaintiff, and they are not seeking monetary damages. The plaintiffs in the Ibanez cases were seeking to repair a clouded title; again, no monetary damages. Which means, no contingency fees. You want to fight a lender on an Ibanez issue, you have to have the pockets to pay hourly fees. Or look for legal aid.

Clearly, you think people who won't pay their mortgages should lose their houses so the property can be sold to someone who can afford it. So do I, for the most part. But I'm not willing to keep changing the rules in the middle of the game just to get the outcome I want. Cut down all the laws, and you'll have nowhere to hide when some lender wrongly comes after you.

Susan, in a foreclosure action, the person being foreclosed on does not generally walk away with any money. And this case does not create a right to sue for damages. As a result, there is no incentive for a lawyer to go looking for these cases.

You are right that most of the people being foreclosed on don't have money for a lawyer. They may be able to obtain a lawyer pro bono (for no fee). More importantly this case is a call to judges that it is their responsibility to strictly enforce the foreclosure statutes, even if the person being foreclosed on never bothers to come to court (like in Ibanez).

But, Marcus, if a mortgageholder feels he has been unjustly foreclosed upon he will bring an action of his own against the originator and he would be the plaintiff in that action. There are already such cases in the courts. And I'm pretty sure the lawyers aren't working for nothing.

in the infamous words of archie bunker, "would it make you feel better, little girl, if they was pushed out of windows?" the only chilling effect is on subsequent auctions as a direct result of this judicial activism. the industry relied in good faith on a long standing title standard that allowed the recording of assignments subsequent to foreclosure. the effect of this overwhelming agreement made the supposed chilling effect impossible. no bids were received at auction b/c the outstanding debt exceeded the market value of the property. the self-fulfilling prophecy of "fixing" a problem that by and large does not exist and in the process creating said problem is a brilliant use of the legal system. alleging that mortgagors are wronged by this procedural issue is ridiculous. hammer lenders on any number of issues but i fail to see the value of invalidating a large number of foreclosures with no upside. the precipitating event in this drama is the delinquency which is not affected in any way by the chain of custody of the assignments or the accuracy of the lien holder in the notice buried in the middle of the herald.