A Massachusetts man should be allowed to keep property he bought from U.S. Bancorp even though the bank didn’t have the right to foreclose on the previous owner, a lawyer argued before the state’s highest court.
The Massachusetts Supreme Judicial Court is hearing oral arguments today in the appeal of a lower-court decision that said the buyer of residential property in Haverhill, Massachusetts, never owned it because U.S. Bancorp foreclosed before it got the mortgage. If that decision is upheld it could have wide implications in the foreclosure crisis in which banks are accused of clouding home titles through sloppy transferring of mortgages.
The lower court’s “statement that my client received nothing is what we disagree with,” Jeffrey Loeb, a lawyer for so-called third-party buyer Francis J. Bevilacqua III told the panel today.
The state high court already ruled Jan. 7 in a different case, U.S. Bank v. Ibanez that banks can’t foreclose on a house if they don’t own the mortgage. That case didn’t address the status of those who buy property from someone after an invalid foreclosure.
“If the decision is upheld, and generally applied, it likely will have adverse implications for hundreds or even thousands of Massachusetts property owners if they find themselves in Bevilacqua’s shoes,” the Mortgage Bankers Association wrote in a friend-of-the-court brief.
Claims of wrongdoing by banks and loan servicers triggered a 50-state investigation last year into whether thousands of U.S. foreclosures were properly documented during the housing collapse.