Court Ruling Could Void Thousands of Foreclosures

Massachusetts supreme court rules against banks
By John Johnson,  Newser Staff
Posted Jan 7, 2011 4:55 PM CST
File photo of a foreclosed home in Houston.   (AP Photo/David J. Phillip/file)

(Newser) – A court ruling in Massachusetts today that went against the home lending industry has the potential to further foul up the foreclosure process across the nation. The state's highest court invalidated the foreclosures of two homes because the banks involved—Wells Fargo in one case and US Bancorp in the other—didn't properly prove they held the titles, reports the Boston Globe. The ruling could void thousands of foreclosures in the state and set a precedent for challenges in other states.

"It's about the most extensive beat-down the banks have received over their shoddy practices," a real estate law professor at the University of Utah tells CNN. "It could be a wake-up call for rubberstamping judges that they need to more carefully examine practices." The case revolves around the complex way banks bundled and sold mortgages. "If the nation's highest court rules that these transfers are not legal, the multi-trillion-dollar mortgage-backed securitization industry could face massive liability," writes the Washington Post.

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