The Supreme Judicial Court in Massachusettsmade a pivotal ruling
on Friday against U.S. BancorpUSB
and Wells FargoWFC
in a mortgage foreclosure case. The higher court confirmed the lower court's ruling which invalidated several foreclosure sales because proof of mortgage ownership was not clear. "This decision is going to raise serious problems in hundreds of thousands of foreclosure cases," said homeowner-defense attorney Thomas Cox, a Maine attorney. "It has the potential to require that foreclosures be done over, and I think there's going to be significant turmoil nationally. There's going to be major uncertainty." Offering another view, American Home Mortgage Servicing, based in Coppell, Texas, said that the "decision is of limited applicability because it is based on law that is unique and specific to Massachusetts. The decision does not extend to foreclosures in other states." Perhaps not yet, but perhaps a precedent has indeed been set. The confusion of ownership is a result of the transference of assets into mortgage-backed securities. Wells Fargo and U.S. Bancorp argued that securitization documents provided sufficient evidence proving that they owned the mortgages before the foreclosure sales occurred. The court deemed this insufficient. As foreclosures are rampant, implications of this ruling are widespread. What will happen to those who purchased homes in foreclosure? The ruling in the case dictates that “any mortgage foreclosure which was initiated by a securitized trust at a time when the trust had not obtained a mortgage assignment which gave it the lawful right to do so is void,” according to Paul Collier III, an attorney representing a homeowner in the case. The homeowner who was evicted still technically owns the home, according to the ruling. Today, traders will be looking at Financial Select Sector SPDRXLF
to see the market impact of this ruling. XLF already took a dip early Friday from $16.42 to $16.04, before a correction to $16.22 at close. Of further interest will be individual banks, such as Bank of AmericaBAC
, which is down almost 1% in pre-market trading. JP Morgan ChaseJPM
, U.S. BancorpUSB
, Goldman SachsGS
, took a similar dip alongside the financial ETF XLF. Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that your own due diligence and consult a certified financial professional for personalized advice about your financial situation.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.