BOSTON, Jan. 7 (UPI) -- A Massachusetts Supreme Judicial Court ruling upholding a lower court decision invalidating two foreclosures may have national implications, analysts said.
The court upheld a lower court ruling challenging the way lenders have traditionally foreclosed on properties without having all the paperwork in place at the time a home is seized, The Boston Globe reported Friday.
The lower court ruling in 2009 invalidating foreclosures on two Springfield homes because the lenders did not hold clear titles to the properties. The supreme court ruling invalidates thousands of foreclosures, reverting ownership back to the homeowners who lost the homes, at least temporarily, said attorney Paul Collier, who represented one of the homeowners in the case.
"The banks and the investors are going to have to deal with those homeowners as to what happens to those properties," Collier said.
In the housing boom, millions of mortgages were consolidated into bonds and sold to investors, an activity that left lengthy and tangled paper trails, obscuring ownership. Many lenders acted on the belief they could foreclose on properties and later produce formal proof they held a mortgage.
The court made it clear it would not sanction that.
"We agree with the [lower court] judge that the plaintiffs who were not the original mortgagees, failed to make the required showing that they were the holders of the mortgages at the time of foreclosure," the justices said in their opinion.
The decision could have national implications, as federal regulators and state attorneys general are scrutinizing lenders' foreclosure tactics, the Globe said.
