BOMBSHELL: Mass. Supreme Court Rules That Most Foreclosure Sales From Previous 5 Years Are VOID

BOMBSHELL - Massachusetts Supreme Court Rules That Most Foreclosure Sales From Previous 5 Years Are VOID

dailybail.com

In essence, the ruling upheld that those who had purchased foreclosure properties that had been illegally foreclosed upon (which is virtually all foreclosure sales in the last five years), did not in fact have title to those properties. Given the fact that more than two-thirds of all real estate transactions in the last five years have also been foreclosed properties, this creates a small problem.

(visit the link for the full news article)

This is HUGE... it is a landmark case that more states are likely to follow. There's going to be a RASH of lawsuits against banks that illegally foreclosed on people... not only from the foreclosed on people but from the people who bought the foreclosed properties.

Here are the key components of the Bevilacqua case:

1. In holding that Bevilacqua could not make "something from nothing" (bring an action or even have standing to bring an action, when he had a title worth nothing) the lower land court applied and upheld long-standing principles of conveyance.

2. A foreclosure conducted by a non-mortgagee (which includes basically all of them over the last five years, including the landmark Ibanez case) is wholly void and passes no title to a subsequent transferee (purchasers of foreclosures will be especially pleased to learn of this)

3. Where (as in Bevilacqua) a non-mortgagee records a post-foreclosure assignment, any subsequent transferee has record notice that the foreclosure is simply void.

4. A wholly void foreclosure deed passes no title even to a supposed "bona fide purchaser"

5. The Grantee of an invalid (wholly void) foreclosure deed does not have record title, nor does any person claiming under a wholly void deed, and the decision of the lower land court properly dismissed Bevilacqua's petition.

6. The land court correctly reasoned that the remedy available to Bevilacqua was not against the wrongly foreclosed homeowner but rather against the wrongly foreclosing bank and/or perhaps the servicer (depending on who actually conducted the foreclosure)

Read number 6 again...



dailybail.com
(visit the link for the full news article)

That's huge. It is also a testament to the fact that our country, for all its problems, is not actually broken. We have a system in place to address grievances. It can be slow. It can be better. But it beats anarchy hands down.

This is the way to punish the crooks.
Nobody is above the law.

So who has to pay?

Who gets to own the homes?

So, if you bought a foreclosed home there sell it and hide the money.

I'd say this can really upset the title insurance companies if they were involved in sales.

This could be painful.

This, combined with things like Social Security finally getting a raise after two years makes me warily optimistic.

Everyone is suing everyone!! LOL I'm getting the popcorn ready. This ought to be good...

This promises to be one of the most seriously complicated financial messes of Americas history. What we have now is a case of Greed in reverse. Everyone will once again scramble to make tons of money off of this situation. Those who stand to profit the most? Lawyers. those who stand to loose the most? the American taxpayer.
When the banks get into serious financial trouble they will be simply bailed out again. With our tax monies.
The banks instigated this, they initiated it, and in the end they will once again be considered too big to fail.
They may be wrong about that because it is the Government that does the bailing, and it is my opinion even they are not too big to fail. If all of this keeps up. Failure is inevitable.
DH

So are we going to have to bail out the banks (again) who can't afford to settle on all of their lawsuits?

Also how can this be tied in to some of the debates about Physical vs electronic titles and all of that?
I know a family who still has never paid a dime on their mortgage because the bank is all tied up trying to produce their actual title...

Think the two issues could overlap?

reply to post by Iamonlyhuman

Lordy I hope this is true. I had a home illegally foreclosed on 2 years ago....Thank God/Goddess I had a small cabin I owned in the mountains to move into. I can't wait to do the research to find out if my State is following suit.

Originally posted by JRedBeard
So are we going to have to bail out the banks (again) who can't afford to settle on all of their lawsuits?

Also how can this be tied in to some of the debates about Physical vs electronic titles and all of that?
I know a family who still has never paid a dime on their mortgage because the bank is all tied up trying to produce their actual title...

Think the two issues could overlap?

That's exactly what this is all about. They didn't have title but they foreclosed anyway, illegally. And then, to make things worse, they sold the home to someone else, illegally. Both the foreclosed on person and the buyer of the foreclosed property can sue.

reply to post by Dimitri Dzengalshlevi

So who has to pay?

Who gets to own the homes?

This is why you buy Title Insurance.

Of course - the article goes on in a linked segment to explain far, far more....

So what sort of investments are the investment managers at insurance companies making? Well, we know the insurance culture isn't fond of extreme sports, and as it turns out their not very enterprising when it comes to their investments either – let's just say their passive, they like fixed income, you know, a few muni's, maybe some treasuries, but above all, they like commercial bonds for their fixed income (and perceived safety), especially those which are derived from Residential Mortgage Backed Securities, or RMBS's.

amvona.com...

Historically, title insurance companies almost never pay out. When was the last time you heard of a title insurance policy actually being used? Over the decades, it was nothing more than a simple entry on the closing HUD statement when real estate was bought or sold. Homeowners didn't' "shop" the policy, and they had no idea that when it showed up on their closing statement, that their lawyer was also a broker for the title insurance company, collecting some 70% of the premium – if they knew that, than they would know that their attorney might also have a conflict of interest when he oversaw / received the title exam, and the selection of the policy.

So why were those underwriters so quick to get off the phone, as soon as we "dug a little deeper" into their criteria? Well, it's because their options don't look too good – in fact there are only two:

a) Acknowledge that the titles to 60 mln. plus homes are badly clouded and not insurable. In which case the entire operation of writing policies, taking in premiums, investing the float in MBS's, so that mutual funds can take in funds from various and sundry retirement accounts of home owners and buy your stock suddenly stops.

b) Pretend like your not aware of the problem and deny or use the more complex version "deny, deny, deny". In this operation, business can continue, at least for a while – although when the final reckoning comes, the problems will be many orders of magnitude larger.

This is... not good.

I would suggest selling stock in any title insurance company.... but good luck finding someone willing to buy it.

Wow. And Massachusets is a pretty influential state politically. I wonder what will happen when this case reaches the supreme court, as it quite likely could.

This could send more financial shockwaves worldwide.

Originally posted by Aim64C
reply to post by Dimitri Dzengalshlevi

 

So who has to pay?

Who gets to own the homes?

This is why you buy Title Insurance.

Of course - the article goes on in a linked segment to explain far, far more....

Sorry, I'm a bit slow on the technical jargon so I'm looking for layman's terms.

From what I'm seeing, this means that both the original house owners and the new owners of the foreclosed homes can sue the banks who foreclosed the houses?

Does this mean American banks are about to be served a hot dish of ass whuppin'?

reply to post by watcher3339




I like what you said. Sometimes the process is slow, painfully so but in the end things seem to work out correctly.

Someone asked who owns the home now... that is my question as well. Anyone know? Would it be the person illegally foreclosed on?

Originally posted by Skadi_the_Evil_Elf
Wow. And Massachusets is a pretty influential state politically. I wonder what will happen when this case reaches the supreme court, as it quite likely could.

This could send more financial shockwaves worldwide.

Understatement of the century.

Basically, it means Title Insurance companies are not going to be able to insure the titles they are supposed to because ... well - they weren't acting like an insurance company (or they probably would have said... "Hey... what happens if they start foreclosing on all of these homes without holding the actual title... then our hind ends will be on the grill....").

Of course, the bigger problem is their choice to invest in mortgage backed securities (or, essentially, investing in mortgages).

I think I have a picture that illustrates the problem:



At some point or another... the system can no longer feed off of itself.

Of course, this other picture also explains the predicament anyone who needs to rely on Title Insurance may find themselves in:

reply to post by Dimitri Dzengalshlevi

Sorry, I'm a bit slow on the technical jargon so I'm looking for layman's terms.

Basically, what Mass. is saying is that if you don't have the Title to the property - you cannot seize it for debt collection purposes. Simply: if you loan someone money to buy something, and you aren't on the Title - you are # out of Luck if they decide to not pay you (though you may still be able to take them to court for contract violation - but we'll see how that one plays out).

This is where Title insurance comes in. When you buy a house, for example, the previous owner may have added on an extension that, technically, crosses into another property (it happens - we are not all surveyors). This causes all kinds of legal problems and Title Insurance companies essentially are there to cover the costs of legal issues and to help get any and all issues regarding your title smoothed out - so you don't find yourself up a creek without a paddle five years into owning a home and finding out there are some legal issues with the previous owner transferring the Title to you.

This court case should have Title Insurance companies pooing in their pants - as they are potentially liable for over 60 million foreclosed homes (or, rather, to the banks that purchased Title Insurance on those homes and properties).

Things get really interesting when you consider that most of the funds that these companies own is tied up in Mortgage Backed Securities - or, basically, the Title Insurance companies bought up mortgages from banks issuing those mortgages.

It's one massive circle-jerk that basically ends with both mortgage issuers and title insurance companies royally screwed.

... Until you consider that Fannie Mae and Freddie Mac are both Government Sponsored Enterprises (GSEs) and account for the overwhelming majority of foreclosed homes....

This is going to be really..... "interesting." I say that because I'm a young man, single, with trade knowledge and military training..... for people who have children and a little less moved by adventure... their sentiment is likely to be more fearful....

reply to post by Iamonlyhuman


Ive never heard of the dailybail... Its an interesting ruling, one of which is bound to head to Federal Appeals courts. The ruling doesnt affect courts outside of the state.

Originally posted by Xcathdra
reply to post by Iamonlyhuman

 

Ive never heard of the dailybail... Its an interesting ruling, one of which is bound to head to Federal Appeals courts. The ruling doesnt affect courts outside of the state.

This is true - thought I don't think it -can- be taken to the Federal courts, as title-issues are a state-run ordeal, and each State is able to set the rules for what qualifies as ownership and a valid transfer of Title.

It is likely, however, that many states will follow in the footsteps of this court ruling - depending upon the way their Title systems are set up and maintained.

Originally posted by watcher3339
That's huge. It is also a testament to the fact that our country, for all its problems, is not actually broken. We have a system in place to address grievances. It can be slow. It can be better. But it beats anarchy hands down.

This is the way to punish the crooks.
Nobody is above the law.

Come on you really believe that? Well all I can say is you haven't been paying attention. There should be hundreds of wall street execs in prison for what they have done - but not one has been charged. They very much seem to be above the law. Just wait the feds will pass some kind of law overruling state law that will get the banks off the hook on this too. Probably give it some catchy name like the Mortgage Security act or some BS.

You do realize that like 90% of the houses sold in the last 10 years have a faulty title chain, because virtually everyone was and is using MERS and not registering the initial sale in the state as is required by law. That's bad enough but then millions of property changed hands multiple times to different financial agencies illegally by not properly doing the paperwork through robo-signing and various other fraudulent acts and again only transferred through MERS. Then you have the problem of the same property being pledged as collateral multiple times in different packages of Mortgage Backed Securities.

It is literally such a mess following the law at this point is guaranteed to take down the stock market, virtually every pension fund, every insurance company, every major bank. It also means getting proper title to a house you bought will be nearly impossible - which means sales of existing homes would grind to a complete halt. I'm not arguing this should not happen - It should. But if you expect the banks to allow this to happen without getting their puppets in Washington involved, I think you are very naive.