A recent Land Court Decision Affecting Foreclosures in Massachusetts

King, the home i was under contract with sold for $360,000 back in 2006 and the person who purchased the home financed the entire thing. The house was sold back to Wells Fargo at auction last year when the property was foreclosed for $190,000. Now how is only $190,000 left over from a 3 year $360,000 mortgage?

We are all frustrated right now! Our lives are being dictated by major corporations. My husband and I last evening were just discussing a few points here: I do not know if I can pull out of my P & S. It states right in it that we have to give Seller time to perfect title once they are on notice of clouding. They can request and we shall give a 30 day extension for them to perfect, if not then they can pull out and we get our deposit back.

So we are left with the following:
- We can sit and wait and see if they bring good title to the table on July 20, our proposed closeing date (in the meantime, we check the paper and mailbox EVERY day with hearts in angst, wondering if they are going to unilaterally cancel our purchase.)
-They can request an extension pushing us to August 20, and then come to the table with no title and say sorry. (Then we can start looking again)
-We can keep looking now, not really sure how to pull out of agreement (or if we want to, we love the house), and see if we find anything else (which is hard, looked 20 plus houses...short sales take 4 months to get a reply unless they are up for auction quickly). They are allowed under the p & S some time to clear title....so we believe we would lose our deposit if we said game over.
- So we are in a lose lose situation caused by a Land Court Judge. My kids have no idea what school they are going to in the fall, I dont know! One of my children is special needs and this is very difficult to handle. We have no idea where we will live, do we move the kids in with the In-laws (good school system/not enough room for all of us) and stick to that town going forward.....

This has caused an unbelievable amount of pain for all of us in these situations. I dont think the impact was thought through, forget the financial impact, but the emotional toll is sometimes unbearable.....we all seek security, knowing where are going to live is part of that.

I wish it was easy enough to say MOVE ON, but its not, there are so many variables impacted by this craziness, there is no simple resolution, either lose money or wait for them to tell me its not going through two months from now....hmmmmmmm...

I called the Judge again today, same message.....I cant believe this is going this far.......

My parents are not sue happy as you suggest; they have paid for 2 inspections (as they have been under agreement since MAY 2008 and therefore, once the bank said they were finally ready to close in March, they had to reinspect since the roof was leaking into the house); they have paid rate lock fees, application fees, had to consult an attorney regarding a dock on the property as it was constructed without a permit, and have had to rent 3 storage units for over a year since they havent had a home. They have now finally moved on. They original stayed with it as we were consistently told we wouold close soon.

reading this message string I can well understand the frustration. As a Realtor, here's how this has been explained to me; The foreclosure process called into question has been accepted practice for the past 143 years. It was further accepted by the MA. board of realm estate conveyancers attorneys. (I could be incorrect on their name, but get the drift). Now along comes the learned judge who not only overturns past practice, but places a cloud on the previously sold titles. His insistance is that the count must be 1, 2, 3, 4, rather than 1, 3, 2, 4. In either event the cause and effect never change. (1) The mortgage wasn't paid and (4) the property was foreclosed on. When these banks placed the properties under contract they were in compliance with the than accepted practice and could, in fact sell the property just as they had sold so many previously (143 years). Once this ruling went into effect they were forced to kill many sales since the titles became uninsurable. Per most P&S agreements, if the title is flawed, the seller has 30 days to correct and than must refund the earnest money as sole remedy to all parties. BOTH parties, the buyer and seller, were acting in good faith when the contract was signed and certainly noone expected one judge to turn the market upside down. But he did get his name up in lights, his 15 minutes of fame!!
Now on to the reforeclose process; Before one can start the process, one must serve the former mortagor. WHERE ARE THEY?? They were "relocated" months ago. Does the 3 month right to cure law kick in again, extending the usual 2-3 month FC process by another 3 months? Could not the former file a class action suit? I.e. I've been homeless for 3-4-5 months and you never even owned the property.
In my opinion, the court's ruling had repercussions well beyond what anyone expected and I don't believe we've seen the tip of the iceberg

What's worse is that unless this "goes away" with a reversal - and it most likely won't, it'll hang up everything in the appeals (litigation) process for much longer.

Good times. I love MA. Thankfully I'll be able to use my downpayment to pay higher sales taxes and higher T fares.

My big question now is if we see a listing that says "bank owned" how can we be sure that it is worth looking at? We have gone so far as to write out earnest money checks when moments after a check has been faxed we hear that the house is in the same mess. Someone already knows the title is cloudy when they list the house.

If you know the house you want to buy, it is easier (if it is what i think it is!!!)to find out if it is in this mess. Goto the registry of deeds online, in my case it will be lowelldeeds.com, search for the property you are interested in. You should see a recording of order of notice, foreclosure deed and assignment. If you see foreclosure deed and assignment both recorded on the same date, it is a clue it is one of the messed house. To confirm, once you are inside the order of notice transaction, click on the "quick document viewer" link and check the date on the document when notice was issued, check the same with assignment transaction as well. If the date inside the document is after the date of the order of notice, that means, assignment did not happen before notice was issued, as required by mass law. If that is the case, don't even spent any time on that house until this situation clears. hope this helps.

Have you looked it up on the Registry of Deeds ?

REO MA good point , what about the pending lawsuits on the people you did CFK for, without the bank properly taking possession? that's a whole other ball of yarn they courts will have to deal with no doubt..

The only other way to cure this, is to buy the note from the bank, as they have the right to sell the note, then the buyer(s) assume the responsibilty of re-foreclosing.....even if the bank did let you buy the note.....who would want to deal with that

To address a couple of points brought up. The registry of deeds may not have all the current info. The ruling indicates the DATE of the assignment signing must preceed the date of first publication. It doesn't require the assignment to be recorded prior, just signed. The dates may follow the proper sequence but be laying on someones deck for recording later. That's one of the reasons these banks don't know just when the assignment was signed. It's still sitting on someone's deck, or worse sitting in a file cabinet of a bankrupt lending company. Second item I'd like to comment on is the "avoid bank owned" comment. From what I've seen this is impacting about a third of the properties. Although some REO sellers are pulling their entire inventory off the market, this is precautionary while they readdress internal procedures to avoid a replication of the fiasco they're going through. Third is buying the note and reforeclosing; Who owns the note? If the assignment isn't recorded just who owns the note? I.e. Bank A held the note, A sold it to bank B but didn't sign the assignment. B forecloses. The foreclosure is invalid since B didn't own it when they started the FC. The same would follow if B sold you the note; they don't own the note they're selling until the assignment is signed. There's no simple answer that I can see and no clear culprit. Business was conducted for years (143) in a lackadazical manner, the registry of deeds accepted the documents for proper recording, the title companies insured what they thought were clear titles and a judge interperted the law in a narrow manner. Now the world screams for an answer in 25 words or less. As I stated before, this is the tip of the iceberg. From what I'm hearing from lenders, the backlog of REO inventory waiting to be foreclosed on nationally is almost 2 million. ONE lender in MA. is sitting on over 20,000 properties...ONE lender!!! All the "warm fuzzy" moratoriums, loan mods and such coming out of Washington are postponing the inevitable. 70% of the loans modified in the first quarter of 2008 are back in default, almost 50% of those modified in the 4th quarter of 2008 are in default. The Ibanez ruling has the effect of a judicially imposed moratorium. When these hit the market it may well look like a buy one, get 1 free market. The tip of the iceberg!!!
End of speech!

I have now taken to running a title search on every property we will even think about looking at. I will not do this again. It is a pain though, some of the land is registered so you cant view the Publication which is usually attached to the Foreclosure Deed after the Affidavit of Notice.

some of the houses we are looking at have been foreclosed twice, or have been bought twice...should pan out to be interesting stack of chaos when this Judge does whatever it is he is going to do.

America is going out of business and somehow we just got sucked into the middle of it all, trapped by a decision that cannot stand. The best thing the Judge can do is say going forward.....this ruling is not even binding law! Usually in our Court system, this level of decision would not hold water. Our case law is usually based upon Appellate level decisions and of Course the SJC.....and again of course the United States Supreme Court. Courts interpret the laws as they are written and this is similar to my going into Court, arguing a Motion to Continue a Trial, and all of a sudden the ruling of that hearing becoming LAW, THAT WOULD LIKELY NEVER EVER happen. I myself argue approximately 50-100 MOtions per month.....that is how low on the totem pole these hearings are.....The problem is the Title Insurance Companies are the ones backing down (and I would have to say looking ahead dont blame them too much). They are afraid to insure any of these properties and usually when something like this happens, it does nothing but flow up..to the Appeals Court and beyond....until they know that this is quieted, they will likely not proceed.

This is why, while of course I await the decision as all, I am not hopeful that that will really help the insurance companies feel comfortable insuring these properties. I hope it does, but I am sure they will have their reservations...I wish the banks would agree to reforeclose and give us some assurance in writing that we will have first right of refusal at "our" purchase price....heres to wishful thinking!

On another note, we have not yet figured out if our house is up for reauction..listing broker says no, all set....ALL SET? Bank Attorney cant figure it out??? My Attorney spends her days calling the Bank Attorney to no avail, they dont really have any information either...UGH!

We are still looking to see if we can locate the original promissory note on the property in hopes that at least it was in fact signed, or some contract indicating the portfolio assignment, long shot, but we are not seeing anything else out there right now.....school is approaching!

You said a bit back that your bank wanted to extend your previously cancelled contract, and thought your sale would go through by August some time. May I ask if you've hear anything else? Also do you mind if I ask which bank you are dealing with. As far as I know, I still have a valid P&S with Wells Fargo, but the extension runs out July 31st. I was hoping we'd get a decision from Judge Long this week, but haven't heard anything yet. If anyone hears anything please let us know! Peter

Here is an update on the Help Me Hank story for those of you interested:

The story will be airing on Monday night (7/13) in our 10 o'clock newscast on the CW56, and in our 11 o'clock newscast on NBC Channel 7. If you aren't able to watch it live, you'll can find it on our website at whdh.com.

Thank you again for getting in touch with me. This story has been absolutely fascinating. It turns out some homeowners who bought foreclosures in the past are also being affected by this ruling.

Take care,
Melina

Ok folks..no news, but called Scott Smith's voicemail again and oh boy...he will out the ENTIRE week of July 13th and like the week after as well. He will not be checking messages, nor will he have access to emails. He states if you are calling about the Ibanez matter, no more information than its under advisement and unlikely a decision be made during the week of July 13th.......SERIOUSLY.....do they know what they are doing to us poor peeps! Yes they do, because several of us have written emails and letters and sent faxes etc.
Oy! I hope our bodies can handle this.....I dont do politics but I am writing to the governor, the Attorney General, pretty much anyone I can think of at this point. A decision has to be made, our money is being held.....we cant move either way until the Bank says so or we lose our deposit ! Our hands our tied, there is no "arms length" here. I understand the banks didnt know this was going to happen, agreements were made in good faith......but I dont care anymore....I cannot not know where we will live in the fall, my home is infested with Lead paint, my children will move no matter what...can you imagine, splitting up my family because the home I live in has Lead paint, my daughter is allergic to many of the materials used in our home, horse hair plaster, cant buy the house I want, cant find any others that are even suitable, and dont know what else to do but sit and wait.

This is trully CRAZED, and I feel like I am going the same way.

Massachusetts' ecomony cannot handle this!

UGH!!!!!!!!!!! :(