Massachusetts Supreme Court Deals Blow to Banks
Over Foreclosures
In a decision that could have far-reaching effects on foreclosures nationwide, Massachusetts' highest court on Friday invalidated the seizure of two homes by Wells Fargo and US Bancorp after the banks failed to prove that they owned the mortgages at the time of foreclosure.
The decision prompted a slump in bank shares through Friday's session, which dragged down the broader market. The decision is one of the first blows to US banks in connection to the ongoing investigations into the foreclosure practices of US lenders. The probes were launched shortly after revelations last September that a number of lenders were using so-called robo-signers, or employees who routinely signed off on foreclosure documents without verifying their authenticity.
Courts in other states are currently hearing similar cases, and a probe has been launched by the attorneys general of all 50 states in to the matter. Friday's decision will also likely bring into question the practice of major banks of bundling mortgages into securities, and regulators may eventually force lenders to repurchase those bundled loans.
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