In the U.S. Bank National Association v. Ibanez case, the Massachusetts Supreme Judicial Court ruled that a bank had no legal right to foreclose because it could not prove it had the mortgage. The banks, in a moment of greed, divided up mortgages to sell as derivatives, but neglected the paper trail of ownership of the mortgages. Their argument of “the mortgage follows the note” did not fly, and Ibanez, instead of being homeless, now has the title.
Democrat U.S. Rep. Marcy Kaptur of Ohio’s Rust Belt has urged her constituents to obtain legal counsel and to challenge the banks, as they cannot produce the proper paper trail, even if they say they can. This begins a new leg of the “Occupy Your Home” movement.
What this ruling implies is that even if you have already been foreclosed upon and evicted, you can still get your home back if the bank didn’t own the mortgage at the time of foreclosure. If you bought up foreclosures at bargain prices, it’ss time to check your title insurance.
The legal ramifications are not yet known, as cases will have to go forward in all 50 states. Right now, the banks are scrambling.