Top Court in Massachusetts Voids Foreclosures by 2 Banks

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In a ruling that may affect foreclosures nationwide, the Massachusetts high court has voided the seizure of two homes by Wells Fargo & Company and US Bancorp after the banks failed to show that they held the mortgages at the time of the foreclosures.

Friday’s decision by the Supreme Judicial Court of Massachusetts, which upheld a lower court ruling, is among the earliest to address the validity of foreclosures conducted without full documentation.

That issue prompted an uproar last year that led lenders like Bank of America, JPMorgan Chase and Ally Financial to temporarily stop seizing homes.

Courts in other states are considering similar cases, and all 50 state attorneys general are examining whether lenders are forcing people out of their homes improperly.

Friday’s decision may also threaten banks’ ability to package mortgages into securities and raises the possibility that loans that were transferred improperly might need to be bought back.

In the ruling, Justice Ralph D. Gants wrote for a unanimous court that Wells Fargo and US Bancorp lacked authority to foreclose after having “failed to make the required showing that they were the holders of the mortgages at the time of foreclosure.” Massachusetts is one of 27 states that do not require court approval to foreclose.

http://www.nytimes.com/2011/01/08/business/08mortgage.html?hp=&pagewanted=print