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Univ. of Arkansas, Fayetteville

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Friday, January 7, 2011

Massachusetts Supreme Judicial Court Restitutes Foreclosed Homes to Borrowers

Yesterday the Massachusetts Supreme Judicial Court voided two foreclosures carried out by  U.S. Bancorp and Wells Fargo in 2007.  Both banks were acting as trustees for securitized pools of mortgage loans that allegedly included the borrowers' mortgage loans.  However, neither bank had been assigned the mortgages, and thus had no right to foreclose on the properties. 

There are many, many thousands of potential cases out there that are identical on the pertinent facts to these two.  Unlawful foreclosures have been so rampant in the past few years that the next stage of this ongoing mortgage crisis may well be a huge wave of restitutions of unlawfully foreclosed properties to borrowers.  Despite what many banks have suggested, undoing unlawful foreclosures is not simply a question of retroactively crossing t's and dotting i's; it is a question of undoing the unlawful dispossession of private property rights of huge numbers of people.  No amount of going back and filling in the holes in paper trails can cure it.  Restitution will be necessary, and it will require overcoming enormous practical problems.

As the lawyer for one of the restituted homeowners said, this case was "merely the first petal off the rose."       

Mark A. Edwards

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Comments

I'm wondering if anyone knows what libertarian-leaning property advocates are saying about all of this problem of banks and financial institutions being sloppy with proving ownership. It would seem to present a "hard case" for their approach which mistrusts government, trusts the "free market" and strongly supports individual property rights. I'm curious what their response to it all is.

Posted by: Tim Iglesias | Jan 9, 2011 11:09:47 AM

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