UPDATE - Read the following story:
Here's the earlier analysis.
The Massachusetts Supreme Court on Friday upheld a lower court ruling voiding two foreclosures because the banks failed to show the proper paperwork to prove they owned the loans-a decision that challenges the way mortgages were bundled and sold around the world.
The Massachusetts court is the highest to ruled on this issue and the decision has the potential to invalidate thousands of foreclosures across the state. It also provides more ammunition to borrowers in other states who could push the case to the U.S. Supreme Court. If the nation's highest court rules that these transfers are not legal, the multi-trillion-dollar mortgage-backed securitization industry could face massive liability.
The closely-watched decision involves two foreclosures: that of Antonio Ibanez and Mark and Tammy LaRace and whether U.S. Bancorp and Wells Fargo, respectively, had proper legal standing to take back the homes after the borrowers missed their payments.
U.S. Bancorp spokeswoman Teri Charest said the judgment "has no financial impact" on the company and that its role in the case was as a trustee for a securitization trust. Wells Fargo representatives did not immediately respond to a request for comment.
The American Securitization Forum, which represents over 330 financial firms, said that it remains "confident securitization transfers are valid and fully enforceable." It said that the case in question critical deal documents and loan schedules were not introduced in the lower court leading to the negative decision. "If these documents had been introduced, it appears that the ruling would have been substantially different," the ASF contended in a statement issued Friday afternoon.
Does MERS have legal authority to foreclose?
Start watching at the 1-minute mark. Includes excellent testimony from foreclosure lawyer Thomas Cox, and Utah professor Dr. Chris Peterson.