IBANEZ: HUGE WIN FOR BORROWERS IN MASSACHUSETTS (NON-JUDICIAL STATE) HIGH COURT

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary

READ FULL DECISION HERE—-> MA S Ct 1-7-11 usbank

see ibanez-decision-analyzed

see CNN Report and Video

NOTABLE QUOTES:

“Where, as here, mortgage loans are pooled together in a trust and converted into mortgage-backed securities, the underlying promissory notes serve as financial instruments generating a potential income stream for investors, but the mortgages securing these notes are still legal title to someone’s home or farm and must be treated as such.” (e.s.)

“The executed agreement that assigns the pool of mortgages, with a schedule of the pooled mortgage loans that clearly and specifically identifies the mortgage at issue as among those assigned, may suffice to establish the trustee as the mortgage holder,” Gants wrote. “However, there must be proof that the assignment was made by a party that itself held the mortgage.

The PPM, however, described the trust agreement as an agreement to be executed in the future, so it only furnished evidence of an intent to assign mortgages to U.S. Bank, not proof of their actual assignment. Even if there were an executed trust agreement with language of present assignment, U.S. Bank did not produce the schedule of loans and mortgages that was an exhibit to that agreement, so it failed to show that the Ibanez mortgage was among the mortgages to be assigned by that agreement. Finally, even if there were an executed trust agreement with the required schedule, U.S. Bank failed to furnish any evidence that the entity assigning the mortgage–Structured Asset Securities Corporation–ever held the mortgage to be assigned.”

Courts in other U.S. 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, including whether loans that were transferred improperly might need to be bought back.

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EDITOR’S COMMENT: I TOLD YOU SO!!!! This decision was inevitable. The Banks believed their political clout would outweigh the third branch of government — the judiciary — and it just doesn’t work that way. Not here in the USA.

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Top Massachusetts court rules against foreclosing banks

By Jonathan Stempel and Dena Aubin

NEW YORK | Fri Jan 7, 2011 1:10pm EST

NEW YORK (Reuters) – In a ruling that may affect foreclosures nationwide, Massachusetts’ highest court voided the seizure of two homes by Wells Fargo & Co and US Bancorp after the banks failed to show they held the mortgages at the time they foreclosed.

Bank shares fell, dragging down the broader U.S. stock market, after the Supreme Judicial Court of Massachusetts on Friday issued its decision, which upheld a lower court ruling.

The decision is among the earliest to address the validity of foreclosures conducted without full documentation. That issue last year prompted an uproar that led lenders such as Bank of America Corp, JPMorgan Chase & Co and Ally Financial Inc to temporarily stop seizing homes.

Courts in other U.S. 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, including whether loans that were transferred improperly might need to be bought back.

Wells Fargo and U.S. 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,” Justice Ralph Gants wrote for a unanimous court.

Wells Fargo was not immediately available for comment. U.S. Bancorp spokesman Steve Dale said the ruling has no financial impact on the bank, which has “no responsibility for the terms of the underlying mortgage or the procedure by which they were transferred” into a mortgage trust.

“What they were doing was peddling these mortgages and leaving the paperwork behind,” said Michael Pill, a partner at Green, Miles, Lipton & Fitz-Gibbon LLP in Northampton, Massachusetts, who represents homeowners and is not involved in the case.

In early afternoon trading, Wells Fargo shares were down nearly 4 percent at $30.92, while U.S. Bancorp was down 1.4 percent at $25.93.

Bank of America stock was down 2.8 percent, JPMorgan fell 3.7 percent, and the KBW Bank Index, which includes all four lenders, was down 2.3 percent. Major U.S. stock indexes were down 0.6 percent to 0.8 percent.

‘UTTER CARELESSNESS’

In the Massachusetts case, U.S. Bancorp and Wells Fargo had said they controlled through different trusts the respective mortgages of Antonio Ibanez as well as Mark and Tammy LaRace, who lost their homes to foreclosure in 2007.

The banks bought the homes in foreclosure, and sought court orders confirming they had title. A lower court judge ruled against them, and Friday’s decision upheld this ruling.

In a concurring opinion, Justice Robert Cordy lambasted “the utter carelessness” that Wells Fargo and US Bancorp demonstrated in documenting their right to own the properties.

Massachusetts is one of 27 U.S. states that do not require court approval to foreclose.

Gants did suggest in his opinion how banks might properly transfer mortgages via securitization trusts.

“The executed agreement that assigns the pool of mortgages, with a schedule of the pooled mortgage loans that clearly and specifically identifies the mortgage at issue as among those assigned, may suffice to establish the trustee as the mortgage holder,” Gants wrote. “However, there must be proof that the assignment was made by a party that itself held the mortgage.”

The cases are U.S. Bank N.A. v. Ibanez and Wells Fargo Bank NA v. LaRace et al, Massachusetts Supreme Judicial Court, No. SJC-10694.

(Reporting by Jonathan Stempel and Dena Aubin; Editing by Lisa Von Ahn and Matthew Lewis)

27 Responses

  1. […] SEE ibanez-huge-win-for-borrowers-in-massachusetts-non-judicial-state-high-court […]

  2. […] SEE ibanez-huge-win-for-borrowers-in-massachusetts-non-judicial-state-high-court […]

  3. […] up the process, examining documents and applying the principles set forth in the Massachusetts IBANEZ […]

  4. […] title examiner who now looks at the title record, especially in view of the IBANEZ Massachusetts Supreme Court Decision, see also ibanez-decision-analyzed, cannot issue a commitment letter much less a policy without […]

  5. Ibanez ruling as recognized by one of the most respected and influential judiciaries in the nation, has breathed “New Meaning” into the “Iron Fisted” non-judicial platform.

  6. Many PSA’s require a loan to be assigned to their respective loan pools no later than 90 days of loan closing date. CUT OF DATE. Assignee’s may not go back to assign an established mortgage loan into a pool after the 90 day expiration. Otherwise, REMIC status risks being disqualified. A completed title chain is the prerequisite for entry into REMIC governed by it’s PSA. A break in the chain of title can not be repaired or perfected by establishing an assignment after the fact. MA ruling is based on land laws which have been in use for many years. They did not create a new set of laws for the Ibanez ruling. MA merely upheld well established property law which needs little interpretation to be understood. Securitized mortgages has caused the confusion and MA upheld the fundamental rights of property ownership according to land law. This ruling will now be used in courts across the country to expose the pretenders.

  7. Ibanez ruling states, “Notice of Trustee Sale” posted in the daily newspaper must list the “Real Lender”. Banks know they were not the “Real Party in Interest”. However, they knowingly accepted the risk and assumed their practices would go unnoticed as it had for millions of foreclosed homes. As banks hunted defaulting borrowers [lips smackin’ for credit default swap payouts] using scare tactics, while fueling a “Paper Momentum” and readying their prey for the kill, they created a “Financial Frenzie” for the borrower. Banks Motto “Start foreclosure [first], Create paper confusion [second], Assignments and chains of title, [third]. They won’t know what hit them [fourth]. No assignments took place and mortgages were never put through a REMIC or into trust. Now banks face another dilema. 1. List “Real Lender” in “Notice of Trustee sale”, 2. Fabricate chain of assignments and title that were never part of a REMIC or trust. 3. Get caught bringing fraud on the court with full knowledge after Mass. ruling. No amount of retreat for re-calulation will re-create or re-manufacture perfected chains of title for a clouded one. No option exists for the banks except Government intervention. Title was clouded the day DOT was signed by the borrower.

  8. I like Patrick Pulatie he makes us think and tell us the way the banks think.

    Too bad he is on the wrong side. 1 million foreclosures last year alone makes all his arguements moot.

    Dying Truth is another story he reminds me of Joseph Goebbels .

  9. excellent work Atty Glenn Russell Jr.! YOU have put Massachusetts back on the map!

  10. Anonymous: I hope the MERS break is coming too. I so pray that it is, that I Google that crappy acronym a few times a week. Here are a couple of tasty tidbits I’ve found today:

    http://appraisersforum.com/showthread.php?p=2075100

    http://activerain.com/blogsview/2061067/what-will-happen-to-mers

    http://www.foreclosurehamlet.org/profiles/blogs/mers-written-response-to

  11. Hoooorraaayyy!!!!!! may all the pretenders burn in hell!!!, little by little the knot around their necks it’s getting tighter, NO ONE can spit and walk over our constitution!! NO ONE!!, they’ll try as them bastards are doing, but they can only get away for so long, Thomas Jefferson must be smiling in heaven!!!! and I am smiling here on earth.
    THANKS NEIL FOR KEEPING US INFORMED!!!

    GOD BLESS AMERICA!!!

    ONE STEP AT THE TIME, SLOWLY BUT SURELY!!!

  12. Ian

    Yes. Feel like this is a victory celebration after a campaign election. First major breakthrough. Stock market actually went down significantly (bank stocks) — but recovered somewhat (good old — pull the market up – inside operations).

    Have to break MERS — but that is coming.

  13. Zoe- There are tens of thousands,if not hundreds of thousands of cases where the assignment of mortgage (usually by MERS) to the foreclosing entity is registered in the county just prior to (or also after) the notice of default,and backdated to sometime around the year the loan was taken out, or last sold. Ironically, MERS wasn’t mentioned in these 2 cases. This is one of the few cases or perhaps the only case where the bank got caught. Anything Option One is involved in is most likely illegal. Here, to try to cover their tracks, they tried to take ownership of the mortgage after the sale by dummying up a chain of ownership, but forgot a few entries. The bank’s attorneys had to try something to save face, but didn’t get too far.

  14. Zoe,

    Important point — but believe judge says trustees purchased property after they foreclosed on mortgage.

    Either way — opinions??

  15. I don’t know, Patrick. I’m more inclined to believe Max Gardner on this one. Sorry.

  16. Failure to prove Legal Standing comes in many forms. Every situation is different however Legal Standing is now a defense for foreclosure in MA. Something that was iffy before.

  17. To Patrick Pulatie, According to you anything and everything is futile so why try. If the homeowners listen to you we still have nothing to build on. We will eventually win with small victories, just like George Washington, the battle will continue.Winning, when it begins to take root, is a plant of rapid growth.

  18. ANONYMOUS-good response. To me, it appears as it US Bank (their attorneys) were just grasping at straws when they produced several hundred pages of rubbish claiming that the loans were to be deposited/assigned into the trust in the future. To which the court responded, that they gave no further proof that the loans actually were assigned into the trust in the future. And they have had since 2007 to forge and fabricate the necessary bogus docs. The pool, of course, was empty. I’m surprised that WF or BOA didn’t subsequently try to foreclose on the mortgages. Wouldn’t surprise me.

  19. But isn’t this a significant, and different from the usual, issue about this case:

    The judge ruled that the banks acquired the mortgage notes only after the foreclosure sale.

  20. Finally, something good for the homeowner. I like the following comment: “U.S. Bancorp spokesman Steve Dale said the ruling has no financial impact on the bank, which has “no responsibility for the terms of the underlying mortgage or the procedure by which they were transferred” into a mortgage trust.” I think that was the wrong thing to say. Now, they are stating they have no rights to the mortgage and note. This sounds like MERS–they have no responsibility if they get sued, but they can foreclose on you. That does not make sense.
    http://www.challengingforeclosure.com Sirak@challengingforeclosure.com

  21. Patrick Pulatie

    Of course YOU would say that..

    All others::

    Some OTHER important quotes are:

    “Where, as here, mortgage loans are pooled together in a trust and converted into mortgage-backed securities, the underlying promissory notes serve as financial instruments generating a potential income stream for investors, but the mortgages securing these notes are still legal title to someone’s home or farm and must be treated as such.”

    “The PPM, however, described the trust agreement as an agreement to be executed in the future, so it only furnished evidence of an intent to assign mortgages to U.S. Bank, not proof of their actual assignment.”

    “Even if there were an executed trust agreement with language of present assignment, U.S. Bank did not produce the schedule of loans and mortgages that was an exhibit to that agreement, so it failed to show that the Ibanez mortgage was among the mortgages to be assigned by that agreement.”

    “Finally, even if there were an executed trust agreement with the required schedule, U.S. Bank failed to furnish any evidence that the entity assigning the mortgage–Structured Asset Securities Corporation–ever held the mortgage to be assigned. The last assignment of the mortgage on record was from Rose Mortgage to Option One; nothing was submitted to the judge indicating that Option One ever assigned the mortgage to anyone before the foreclosure sale. [FN19] Thus, based on the documents submitted to the judge, Option One, not U.S. Bank, was the mortgage holder at the time of the foreclosure, and U.S. Bank did not have the authority to foreclose the mortgage.”

    “A confirmatory assignment, however, cannot confirm an assignment that was not validly made earlier or backdate an assignment being made for the first time.”

    “Where there is no prior valid assignment, a subsequent assignment by the mortgage holder to the note holder is not a confirmatory assignment because there is no earlier written assignment to confirm.”

  22. […] see ibanez-huge-win-for-borrowers-in-massachusetts-non-judicial-state-high-court […]

  23. I happened upon this rmbs research by DBRS.com which is a Canadian S&P-type ratings agency. Dated 9/09, 77 pages of charts,graphs,etc. Their default frequency assumption on subprime loans based on payments past due are as follows;
    30 days past due 60% default rate
    60 days past due 75% default rate
    90 days past due 90% default rate
    BK 90% default rate
    FC 95% default rate
    DBRS expects the window of default to range from 1.5 yrs.to 3 yrs. for most mortgage loans. Default means a seriously delinquent (90days)situation where the only foreseeable resolution is f/c and liquidation. DBRS.com hit methodologies on top bar. Isn’t improper underwriting by federally chartered banks a punishable offense? The 1 1/2 to 3 yr default seems to have been guaranteed. Hadn’t seen this before.

  24. Well, ALRIGHTY then!!!!! Next!!???!!!???

  25. This is not a huge win. Read the ruling.

    Yes, there was no legal standing since the Deed was not assigned prior to the foreclosure initiation, but if the Deed had been assigned prior to it, then all would be fine. As it is, the foreclosure now only needs to be restarted, and it would be fine.

    The Court also addresses a lack of a complete Chain of Title, and essentially suggests that one would not be needed. So that argument ceases in MA.

    The ruling states that an Assignment need not be recorded.

    The Note and Deed being separated permanently is killed by the comments regarding a Note being transferred but not the Assignment, then the beneficiary is acting like a “Trustee” until such an Assignment occurs.

    And, the ruling suggests that providing the Court with the correct PSA and Mortgage Loan Schedule could effectively prove ownership of the loan, even if the assignment had not yet occurred.

    This ruling affects only a narrow group of homeowners in MA, but it certainly does not bode well for most in MA.

  26. I noticed that MERS was not involved in this case. Does this decision shine a better or worse light on MERS assignments?

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