Earlier this year, the Supreme Judicial Court of Massachusetts handed down a decision in the now famous case of U.S. Bank v. Ibanez, in which the SJC ruled that a foreclosing bank must actually hold the mortgage at the time of the foreclosure. The issue that occurred in the case and in countless others, was that at the time of the foreclosure the assignment paperwork between lenders when the mortgage was sold had not been completed. This meant that the lender was not yet the holder of the mortgage and had no right to foreclose.
Fast forward to this week when the SJC heard oral arguments from attorneys on a related foreclosure case: Bevilacqua v. Rodriguez. In this case, Mr. Bevilacqua purchased property in Haverhill from U.S. Bank, N.A. after U.S. Bank, N.A. foreclosed on the previous owner. Based on the ruling in Ibanez, U.S. Bank, N.A. conducted an invalid foreclosure on the property because it was not the holder of the mortgage at the time they foreclosed.
Because they were not the holder of the mortgage at the time they foreclosed, the Land Court ruled that Bevilacqua did not own title to the property because U.S. Bank, N.A. had nothing to convey and its conveyance to Mr. Bevilacqua is null and void.
What a mess!
Attorneys for Mr. Bevilacqua appealed the decision and the SJC agreed to take the case and heard oral arguments from both sides on Tuesday. The major issue at stake here is whether a buyer can purchase real estate from a bank that lacked the right to foreclose on the previous owner? Based on the Land Court’s ruling, the answer is no and the buyer owns nothing.
The SJC should have a ruling out in the next few months. Either way, it will have huge ramifications on the thousands of foreclosures that have already occurred in Massachusetts and in the future.
Stay tuned…
