When foreclosing on mortgages the banks have been skipping the rule of law. They have not followed the rules for the transfer of property preferring to pretend that their electronic records are a viable substitute. I never believed the courts would go along with that and the Massachusetts court did not. Here’s the story from that excellent blog, Rortybomb.
The biggest news is the decision in Massachusetts’ “Ibanez case”, where the Massachusetts Supreme Court voided the seizures of two homes by Wells Fargo and US Bank based on their inability to show that they owned the mortgages at the time of foreclosure. Tracy Alloway walks you through the case, David Dayen has more including the PDF of the decision, and analysis from Yves Smith and Felix Salmon.
From the opinion: “Where, as here, mortgage loans are pooled together in a trust and converted into mortgage-backed securities, the underlying promissory notes serve as financial instruments generating a potential income stream for investors, but the mortgages securing these notes are still legal title to someone’s home or farm and must be treated as such.”
They ruled through Massachusetts law instead of New York law, so no answers on looming New York trust law. Bank stocks are down. This is likely to have major implications down the road. We’ll have more on this opinion later.
I do not believe the ruling will stand. Congress will ride to the rescue of the banks legalizing their reckless disregard for state law and afflicting the suffering homeowners with even more pain. Congress will enact it. Obama will sign it. He will then explain it as a major legislative victory. Everything he does merits a press release and a couple of morning show appearances demonstrating his successful legislative record.
I wish there was someone somewhere who was as concerned with the rights and privileges of the American middle class and less concerned with the welfare of the banks.