Stopping foreclosure in Massachusetts has become easier or harder, depending on which side one is on, after Massachusetts Judge Keith Long affirmed the decision he issued in March, declaring invalid two foreclosures filed by U.S. Bank and Wells Fargo because of missing mortgage transfer documents.
In his ruling this October, Long rejected a request from the two banks to reinstate the foreclosures in Springfield which he had invalidated in March due to missing documents.
Long explained that the foreclosures filed by U.S. Bank and Wells Fargo against the properties in Springfield lacked documents required under Massachusetts foreclosure law. The documents involve paperwork that need to be filed by banks and investors every time they sell mortgage assets to other parties. But because of the speed and frequency of changes in ownership of mortgages, some documents often get missed, misplaced and lost.
Judge Long added that although U.S. Bank and Wells Fargo ultimately fixed the missing documents, their efforts did not resolve the fact that they foreclosed without the proper documents as required by law.
Although the court ruling was good news to homeowners and other parties devoted to stopping foreclosure, the decision has triggered concerns in the mortgage sector and the title insurance industry.
Lawrence Scofield, lawyer for the two lenders, said Judge Long has put into uncertainty every foreclosure carried out in Massachusetts over the past 20 years. Scofield explained that only foreclosures after 1989 will be affected by the ruling because of the state law that allows people to challenge land ownership within 20 years of an ownership modification.
Some parties contend that now, any owner of a Massachusetts house that was foreclosed within the past 20 years can be hit with a lawsuit claiming ownership.
After the initial ruling in March, some parties already reacted to the ruling by delaying foreclosure sales in cases where the titles are clouded. Some lenders such as Bank of America cancelled some of their filed foreclosures to ensure first they had the required mortgage transfer documents.
Title insurance companies meanwhile have been taking a long time in performing title searches and issuing title insurance policies because of concerns about the ruling.
In response to the adverse reaction from some parties, Eloise Lawrence, lawyer for Greater Boston Legal Services, said that the lenders are campaigning to win public opinion for matters that they cannot win in court. She added that banks should recognize legal efforts in stopping foreclosure.