The banking industry has already taken heat for the “robo signing” scandal but now a Massachusetts high court has overturned two foreclosures due to errors in the banks’ record keeping.
The Setup: The majority of homeowners secure their financing through a traditional mortgage held by a bank, thus making the Bank the owner of the property should the homeowner default on the mortgage loan.
At any point after the property closing, the Bank can transfer the mortgage to another bank for various reasons. HOWEVER, the mortgage note must be endorsed by the transferring bank – much like a personal check – for the new bank to obtain legal ownership of the property.
The Problem: The banks in question were hasty or just plain irresponsible when it came to signing or recording the appropriate paperwork for a mortgage transfer and the problem was compiled when the mortgage was transferred multiple times.
The Result: The foreclosure cases in Massachusetts were overturned because no legal trail of ownership could be established. Even though lawyers for the banks are thinking of ways to bring the case back to court, it would appear at the time that the homeowners own their homes without any penalties.
Read the whole story here.
