Massachusetts High Court Ready To Rule On 'Ibanez/LaRace' Case; Validity Of Thousands Of Bay State Foreclosures Hang In Balance

In Boston, Massachusetts, Bloomberg reports:

• Massachusetts’s highest court is poised to rule on whether foreclosures in the state should be undone because securitization-industry practices violate real estate law governing how mortgages may be transferred.

• The fight between homeowners and banks before the Supreme Judicial Court in Boston turns on whether a mortgage can be transferred without naming the recipient, a common securitization practice. Also at issue is whether the right to a mortgage follows the promissory note it secures when the note is sold, as the industry argues.

• A victory for the homeowners may invalidate some foreclosures and force loan originators to buy back mortgages wrongly transferred into loan pools.(1) Such a ruling may also be cited in other state courts handling litigation related to the foreclosure crisis.

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• The case is U.S. Bank v. Ibanez, 10694, Supreme Judicial Court of Massachusetts (Boston). The lower-court cases are U.S. Bank National Association v. Ibanez, 08-Misc-384283, and Wells Fargo Bank NA v. LaRace, 08-Misc-386755, Commonwealth of Massachusetts, Trial Court, Land Court Department (Boston).(2)

For the story, see Foreclosures May Be Undone by Massachusetts Ruling on Mortgage Transfers.

For a related post, with links to relevant court documents, see Massachusetts High Court Hears Arguments In 'Ibanez' Case That Threatens To Open The Door To Voiding Thousands Of State Foreclosures.

(1) A homeowner victory could also trigger an additional slew of lawsuits (ie. alleging violations of the Federal Fair Debt Collection Practices Act, state law prohibiting unfair and deceptive acts or practices in violation of G.L. c. 93A, § 2, etc.) against the foreclosure mill law firms who have brought foreclosure actions tainted with flaws similar to those at the center of this case.

(2) For Massachusetts Land Court Judge Keith C. Long's two rulings in this matter, see:

• U.S. Bank Nat’l Ass’n v. Ibanez (Ibanez #1), 17 Mass. Land Court Rptr. 202 (Mar. 26, 2009),
• U.S. Bank Nat’l Ass’n v. Ibanez (Ibanez #2), 17 Mass. Land Court Rptr. 679 (Oct. 14, 2009).

For related earlier posts on this story, see:

• Lenders' Problem "Entirely Of Their Own Making" Says Judge In Affirming Earlier Ruling That Puts Title To Foreclosed Massachusetts Homes Into Question,
• Court Says Foreclosure Sales Were Invalid As Banks Didn't Acquire Interest In Delinquent Loans Until After Legal Action Was Completed.