Friday, January 7, 2011

Massachusetts Ruling May Open The door to Voiding Florida Foreclosures

An important development happened today that could have far reaching implications on the foreclosure mess in Florida. The Massachusetts Supreme Judicial Court ruled today that, under Massachusetts law, any effort to foreclose a mortgage by a party lacking "authority" to carry out a foreclosure is void. The Court held that foreclosure plaintiffs, most of which were securitized trusts, could only foreclose and sell a homeowner's property if they were assignees of the mortgage at the time required under the law. In broad terms, since the banks didn't follow their own rules for transferring mortgages, a foreclose by a bank that owned or held a mortgage by way of a defective assignment is void.

Another way of saying that is if a mortgage is not properly assigned in Massachusetts, a bank/lender cannot foreclose. The issue of improper assignments and their enforceability is a defense that experienced Florida foreclosure defense attorneys have been raising for a while now.

In its opinion, the Massachusetts highest court cited a 1990 Florida appellate court case that held a foreclosure action could not be based on assignment of mortgage dated four months after commencement of the action. Additionally, the banks in the Massachusetts case conceded that assignments of mortgages in blank did not constitute a lawful assignment of the mortgages, which should help defense attorneys in those types of cases. Also, the Court discussed other issues which may be helpful to homeowners, including matters related to the concept of the mortgage following the note.

Basically, this was a win for homeowners. This ruling may open the door to invalidating some foreclosures and force loan originators to buy back mortgages wrongly transferred into loan pools. Stay tuned.