A few months ago, many banks suspended foreclosures because of inadequate and incomplete paperwork, leading to the term “robo-signing” in which bank officials would sign hundreds of documents at a time without proper oversight. This is the first fallout from those revelations.
According to Reuters, “in a decision that may slow 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.
The Supreme Judicial Court of Massachusetts’ unanimous decision on Friday upheld a lower court ruling. It is among the earliest cases to address the validity of foreclosures done without proper documentation.
That issue, including the use of “robo-signers” who approved foreclosure documents without reviewing them, 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.
“A ruling like this will slow down the foreclosure process” for lenders, said Marty Mosby, an analyst at Guggenheim Securities in Memphis, Tennessee. “They’re going to have to be really precise and get everything in order. It doesn’t leave a lot of wiggle room.”
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.”
One can speculate that lenders might now accelerate and streamline the short sale process as the easiest, least expensive, and least risky solution to the problem of non-performing property loans.
The full article can be read here.