Ibanez Mortgage Case Could Become a Major Pitfall for Banks

By Kyle Chezum Updated on 1/11/2011

1/11/11

On Friday, the Massachusetts Supreme Court, one of the most authoritative state Supreme Courts in the nation, ruled that Wells Fargo and US Bancorp had no right to foreclose on two properties due to the fact that the banks could provide no evidence that the mortgages had been legally assigned to them.  This ruling was handed down in spite of very clear evidence that the mortgages in question were, in fact, in utter and total default.

This could create a major pitfall for other banks in Massachusetts and around the nation trying to foreclosure on properties.  There was nothing unusual about the Ibanez case.  Mortgages are bought and sold many times, and the paper trail of ownership can be difficult to track.  The situation becomes even more complex when mortgage backed securities are involved and ownership passes to investors.  The Massachusetts Supreme Court is regarding as a precedent-setting court.  This ruling will likely affect foreclosure practices in many other parts of the nation.

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