By Mark DeCambre for the New York Post
Photo Source: AFP/Getty Images
Two huge mortgage lenders fought the law — and the law won.
Wells Fargo and US Bancorp got slapped in the briefs yesterday, losing a closely-watched legal battle over a botched foreclosure in Massachusetts.
The state’s top court said it was OK for a judge to void the taking of a home if the bank couldn’t prove it owned title to the property.
While the case centered on just two Bay State houses, experts said the ruling could ripple through tens of thousands of properties and across the nation.
“My belief is that New York will take its cues from Massachusetts,” said consumer bankruptcy lawyer Linda Tirelli.
Investors feared the worst as well, selling off a host of bank stocks — running for the exits in large numbers.
Wells Fargo shares fell as much as 5 percent while US Bancorp dipped 2.4 percent on the news before recovering a bit in the afternoon. Both had very high volume.
The ruling by the top Massachusetts court upheld a trial court ruling last year that voided the seizures by Wells Fargo and US Bancorp, saying the banks lacked the authority to evict homeowners from their properties because the institutions couldn’t prove they owned the mortgages.
Similar problems have popped up in courthouses across the country but the ruling yesterday is believed to be the first that reached a state’s top court. Banks have trouble finding the proper paperwork because most mortgages are pooled and then converted into bonds and sold to investors around the world.
Massachusetts Attorney General Martha Coakley said that her state is still suffering from the housing crisis and that the burden of proof of ownership must fall on the big banks.
The verdict also comes days after Bank of America and Ally Bank agreed to pay hefty sums to settle claims with mortgage giants Fannie Mae and Freddie Mac that they improperly originated mortgages during the housing boom.
“We really see a pattern of the major banks being either unwilling or unable to come forward with the appropriate documents,” Philip Stein, partner at Bilzin Sumberg told The Post.
“This judgment has no financial impact on US Bancorp,” a bank spokeswoman said. “Wells Fargo believes the court’s ruling does not prevent foreclosures on loans in securitizations,” it said.
Source: Big banks battered by foreclosure ruling (nypost.com)