Mortgage Law May Undo Foreclosures in Some States

By Kyle Chezum Updated on 1/6/2011

1/06/11

In Massachusetts and some other states, the war between banks and homeowners who have faced foreclosure may soon take an unusual turn.  Homeowners have made claims that mortgages were transferred into mortgage-backed securities without the recipients of these securities being named during the transfer process, which is technically in violation of some state mortgage transfer laws.

If courts agree, some foreclosures may be undone.  It is uncertain what banks will do to make amends with slighted homeowners in this event.  Affected banks may also have to buy back additional securitized loans.

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