Big week with foreclosures
Attorney Richard D. Vetstein. continues to report about the legal angles of foreclosure.
This week, he explains the Bank of America decision to halt foreclosures and watches as Ibanez gets his day at the Supreme Judicial Court. (He’s kept an eye on the Ibanez case since September last year, with round 2
in October, and as it headed for the Supreme Judicial Court last winter.)
Last week, Bank of America, the nation’s largest bank, became the latest lender to halt foreclosures in 23 states because of concerns that lenders submitted faulty foreclosure court documents.Massachusetts Attorney General Martha Coakley has asked Bank of America to halt foreclosures in Massachusetts, but has not filed a formal action to do so yet.
With the BofA/JP Morgan Chase announcement to halt foreclosures, the practice of “robo-signing” has come under fire. Robo-signing is where mid-level bank executives sign thousands of affidavits a month attesting that they had personal knowledge that the facts of the foreclosure were as presented, when in fact they had no such knowledge. A major bank executive admitted to signing over 8,000 such affidavits per month.
The net effect of the banks’ halt on foreclosures will be that the current frenzied pace of foreclosures will slow considerably as well as the evictions of defaulting homeowners. Also, the inventory of foreclosed properties will continue to stagnate, and will not be absorbed into the market for many, many months to years to come. This is exacerbated by some title insurance companies’ unwillingness to insure over potentially defective foreclosure titles due to the errors in the process. All of this will have a dramatic impact on the REO market and the market as a whole.Ibanez Case arguments on Thursday
The oral argument in the much anticipated U.S. Bank v. Ibanez foreclosure case is Thursday October 7, 2010 at 9:00AM at the Supreme Judicial Court. You can watch the live webcast here.Watch for a discussion of whether the Land Court’s ruling will be applied retroactively or prospectively. This is huge. A retroactive ruling will leave thousands of invalid foreclosure titles intact. A prospective ruling will effectively validate the majority of foreclosures invalidated by Land Court Judge Keith Long’s controversial ruling. I’ve been predicting that the SJC will strike a balance by upholding the Land Court on the merits, but applying the ruling prospectively.
Links:
Borrower side brief
Lender side brief
Friend of the Court brief
What do you think will happen in the Ibanez case this week? What do you think should happen?
What do you think of the Bank of America decision to halt foreclosures?
