Last week, Massachusetts’ highest court, the Supreme Judicial Court, handed down its ruling in the Ibanez case, affirming a lower court’s ruling which invalidated two foreclosures based on U.S Bancorp and Wells Fargo’s improper paperwork. The ruling affirms that banks must show that they were assignees of the mortgages at the time of the foreclosure. That is, if they were not the original lender, banks must show they were properly assigned the mortgage– the document that gives the lender the right to have the property sold to repay the loan if the borrower defaults. The decision has been interpreted as a major warning to banks throughout the country, and a general “win” for homeowners who are being foreclosed on.
While this may be a novel issue to some, for months now, legal services attorneys and student advocates in Boston from the Harvard Legal Aid Bureau and Greater Boston Legal Services have been making the same argument in local housing courts. (Full disclosure: I am outgoing president of the Bureau.) The Ibanez decision confirms that they may continue using this powerful defense. Hopefully, advocates in other states will soon be bolstered by similar decisions in their state courts.
While some may be looking to the federal government for solutions on how to stem foreclosures, the Ibanez decision shows that some problems can be solved at the local level with the assistance of competent attorneys. Legal services attorneys and student advocates have already prevented countless individuals from being evicted from their homes post-foreclosure by making arguments based on the mechanics of mortgages, assignments, and foreclosures.