In Massachusetts, the groundbreaking foreclosure reversal ruling of a few weeks ago is now following its logical path. In what “appears to be the next step in the conversation,” according to borrower lawyer Paul Collier, the Supreme Judicial Court of Massachusetts will now examine buyers’ rights when a foreclosed home has been resold[1]. The case will bypass lower courts and go straight to the state supreme court.
The case, Bevilacqua v. Rodriguez, will have a serious impact bundled mortgages that were sold as securities to investors. In this case, Bevilacqua, who bought a property via a foreclosure sale from US Bancorp, was ruled in August not to be the property’s owner and, therefore, to not have the standing to inquire about claims. Bevilacqua was trying to compel the original owner to state unequivocally whether or not he had a claim on the property in question. In August, the judge in the case stated that “all Bevilacqua had was a deed from an invalid foreclosure sale.” The same judge expressed “great sympathy for Mr. Bevilacqua’s situation,” but said that his proper grievance and remedy is against US Bancorp. The original owner of the property has never been located.
Oral arguments for this case will likely take place in April, although the scheduling is still tentative. Another borrowers’ lawyer, Glenn Russell, believes that the ruling could allow wrongfully foreclosed-upon borrowers to retrieve their properties. Not surprisingly, this throws the entire system into an uproar as lenders, borrowers, title insurers, homeowners and former homeowners must simply wait to see what the court decrees. The court could include proposed solutions in its decision, or it might simply demand that the state legislature resolve the problem. For now, Massachusetts hangs largely in limbo awaiting this serious decision.
Thank you for reading the Bryan Ellis Real Estate Letter! Your comments and questions are welcomed below.
[1] http://www.bloomberg.com/news/2011-01-21/faulty-foreclosure-case-in-massachusetts-high-court-may-hurt-home-buyers.html
One more example of lawyers doing nothing to help anyone, as there is no intial injured party if the owner cannot be located. Which I have serious doubts about, really impossible to drop off the radar unless you are willing to do some extreme things to achieve this. Just the first rotten fish in this fiasco!
One more reason to stay as far from much of the east coast as possible, and as Mike points out, title insurance is one more part of the scam when buying real estate, too often played on buyers and sellers. They want you to buy it for an inflated price, but it then bail if you need to use it!