IPFS News Link • Housing

Massachusetts Foreclosure-Gate: There Are No Mortgages in MBS

01-07-2011 • Market-ticker.org & BusinessInsider.com

The Massachusetts Supreme Court just dealt a negative ruling to the banks in the closely-followed Ibanez case, which challenged securitization standards. It's pretty straightforward: The banks didn't have the proper paperwork to foreclose, says the court. Hence, no legitimate foreclosure. Oh oh. That's exactly what I argued at the time. If the details look like what this appears to be, the banks are totally ****ed on their securitized paper. This decision is from the State Supreme Court and thus is final within the State, and makes it likely that MBS holders will sue en-masse for the sale of fraudulently-constituted securities (that is, there are no mortgages in the MBS they were sold!) The Massachusetts Supreme Court just dealt a negative ruling to the banks in the closely-followed Ibanez case, which challenged securitization standards. It's pretty straightforward: The banks didn't have the proper parwork to foreclose, says the court. Hence, no legitimate foreclosure. Tracy Alloway at FT has a good overview of what was at stake here, but essentially it comes to question of whether banks have standing to foreclosure. We'll post the ruling as it gets out. Shares of Bank of America, Wells Fargo, and USB had been higher, but are now lower in the span of a few minutes. Wells Fargo is down nearly 2.4%.