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Massachusetts Official Calls for Tribunal to Determine Who Owns Foreclosed Homes

January 17, 2011

Our Highland foreclosure defense lawyers wrote recently about a Massachusetts Supreme Judicial Court decision that required foreclosing banks to produce paperwork proving that they actually own the property in question. Despite the seeming obviousness of this requirement, the court's decision was widely expected to throw a wrench into the Massachusetts real estate market. Among other things, the decision is expected to increase the number of homeowners who fight foreclosure by suing to force the bank to produce its paperwork. And buyers for the roughly 33,000 homes already foreclosed in the state may not technically own those homes. To address those problems, Massachusetts Secretary of State William Galvin called for a special tribunal on foreclosure and title issues, the Boston Globe reported Jan. 11.

The high court ruling said lenders may not foreclose on two mortgages that had been securitized, because they couldn't prove they actually owned the loans -- they did not have assignments of the mortgages and their securitization documents did not name the individual loans at issue. That ruling affects every foreclosure in the state. In the short term, it's likely to slow down foreclosures as lenders scramble to find the paperwork they need to prove ownership. However, Galvin's call for a tribunal reflects concern about a sharp increase in lawsuits against lenders, from both borrowers and buyers. Already pending is one case filed by a buyer of a Haverhill home that was determined to be incorrectly foreclosed. The court ruled that the buyer does not own the home, and should seek compensation from the bank that incorrectly foreclosed and resold it.

This ruling is echoed by decisions in other state courts, including New Jersey, New York and Ohio. California does not yet have such a ruling, but our Santa Ana foreclosure defense attorneys suspect it's only a matter of time. Paperwork problems don't reflect whether the underlying foreclosure is valid, of course -- but they still matter very much, because they raise the risk of an incorrect and illegal foreclosure. This problem is not just in Massachusetts, because lenders' shoddy practices are nationwide and endemic to the mortgage industry, as the robo-signing scandal has made clear. That means Californians will likely be able to extend the foreclosure process, at the least. And for those who are genuinely being foreclosed incorrectly, this scandal will provide a reason for judges and perhaps even lenders to take their claims seriously.

Howard Law PC has practiced foreclosure defense law since the beginning of the housing crisis, helping clients negotiate fair loan modifications and fight predatory lending practices. We are happy to say that we've been able to help many Californians hold on to their homes at a lower, more reasonable monthly payment. In some cases, our clients have been able to negotiate simple changes in interest rates or loan structure without going to court. In others, our Carson foreclosure defense lawyers have sued, and continue to sue, lenders that have refused to give our clients fair consideration, or even violated their rights with unfair lending practices. In all of our loan modification cases, our goal is to leave our clients with a reasonable, sustainable monthly payment.

Howard Law offers free, confidential case evaluations, so you risk nothing by speaking to us about you case and your rights. To learn more about us or set up a meeting, you can send us a message through our website or call toll-free at 1-800-872-5925.