Last week, the Massachusetts Supreme Judicial Court (SJC) handed down what bodes to be a landmark decision not just for homeowners facing foreclosure, but for lenders throughout the country and homebuyers and note-buyers everywhere. In the decision, the SJC determined that two foreclosures enacted by US Bancorp and Wells Fargo were invalid because the two lenders had not adequately proved that they actually owned the mortgages in question, which had been bought and sold multiple times before the foreclosures. During the bulk-buying and -selling process, mortgages are packaged in groups and may not be individually reassigned from seller to buyer, particularly when they are bought and sold rapidly as is the norm. Since the lenders were unable to prove unequivocally that they had the right to foreclose because the two mortgages in question were not reassigned to their new owners properly, the SJC rendered those foreclosures invalid.
Now that the precedent has been set, class action suits that were literally waiting in the wings – and one that went on hold to await the decision – are gearing up. One such suit in Massachusetts has resumed immediately: a “statewide class action in which Massachusetts homeowners accuse US Bancorp and Ally Financial, Inc. of faulty foreclosures”. The lawyer for the borrowers, Kevin Costello, file a motion yesterday to restart evidence gathering now that the decision is in and believes that “it’s going to bring relief to all of the people who are dispossessed homeowners in many instances.” Costello and others like him hope to “unwind” the illegitimate foreclosures and either force loan workouts or compel originators to buy back the problem loans. Either way – and even if a foreclosure still ultimately results – homeowners are likely to receive a massive “stay” on the entire process as the lawsuits and the unwinding could add months or years to the process.
Do you think that these class action suits will help or hurt homeowners and home buyers in the long run?
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