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Thread: Mass. Supreme Court Rules That Most Foreclosure Sales From Previous 5 Years Are VOID!

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    Regular Member Lawful Aim's Avatar
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    Mass. Supreme Court Rules That Most Foreclosure Sales From Previous 5 Years Are VOID!

    BOMBSHELL - Massachusetts Supreme Court Rules That Most Foreclosure Sales From Previous 5 Years Are VOID

    http://dailybail.com/home/bombshell-massachusetts-supreme-court-rules-that-most-forecl.html
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    Campaign Veteran since9's Avatar
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    I don't know what to say. Regardless of the validity of their ruling, do they have any idea as to how many families would be on the street if this law were enforced? Families who, in good faith, found a foreclosure, grabbed the opportunity, moved in, settled down, made friends at school and work, and are well on their way to financial success.

    Now, suddenly, all their hard work is for naught? All the money they put into these properties fixing them up? Their sweat equity, which they could have worked at a second job, but instead chose to invest in their real property?

    I would countersue, saying: Fine: You can have your house back at cost + price below market + every second invested in the house at the highest wage I've ever earned + every penny I've invested in the house including interested calculated at the greatest rate of return I've ever earned in one month since the day I bought the house + all moving expenses + cost of new home of equivalent square footage, location, neighborhood, schools, location to work and if you can't match it, it must be worth more, and you pay the cost.

    Here's a better idea: Where THE COURTS goofed in granting foreclosure, THE COURTS should reimburse the plaintiffs for their losses, equivalent to the aforementioned calculations.

    Leave the honest, law-abiding families who moved in, in their humble abodes. Put another way, the plaintiffs were wronged. Reimburse them for their troubles, but don't create further wrongs by impacting the innocents. Two wrongs don't make things right.
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    Regular Member HandyHamlet's Avatar
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    Quote Originally Posted by since9 View Post
    I don't know what to say. Regardless of the validity of their ruling, do they have any idea as to how many families would be on the street if this law were enforced?
    You mean as apposed to the families who were illegally foreclosed upon? And kicked to the street?

    In essence, the ruling upheld that those who had purchased foreclosure properties that had been illegally foreclosed upon (which is virtually all foreclosure sales in the last five years), did not in fact have title to those properties.
    What a surprise, stolen goods don't come with titles.
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    So I actually CAN afford that multi million dollar house on the beach afterall!!

    Can buy a lot of beer and pizza without a mortgage payment!! What about car payments, are those null and void as well? I'd like to get a Beamer!

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    Regular Member hermannr's Avatar
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    Quote Originally Posted by Sky1 View Post
    So I actually CAN afford that multi million dollar house on the beach afterall!!

    Can buy a lot of beer and pizza without a mortgage payment!! What about car payments, are those null and void as well? I'd like to get a Beamer!
    What the court basicly said is: you cannot sell what you do not own. There are all kinds of laws against that type of stuff.

    This is what happened: Homeowner goes to a broker or financial institution and borrows money to purchase RE. The financial institution then requires security for that loan based on the deed to the property.

    After the financial institution has made so many loans, it needs more funds to loan so it packages up a bunch of these "mortgages" and sells them as an investment with a fixed rate of return (the interest rate of the mortgages, minus fees). This bundle may be broken down, repackaged, and sold many times over so it is impossible to pinpoint who does own the defaulted mortgage, or even if the original mortgage was backed by a valid deed in the first place.

    What the court has said is: even though the homeowner is making payments to the original financial institution, that original financial institution no longer "owns" the mortgage, and therefore cannot foreclose on, and sell, something it no longer "owns".

    It would be like you purchasing a car, then you sell that car on payments, then you sell that "promise to pay" to someone else, then when the person no longer pays, you reposess the car. You can't reposess or sell it, it is no longer yours. You sold the right to the car, and the right to the payments...

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    I tried reading the ruling but theirs seemed to be much different than most SC rulings that I have read in the past. For instance they did not give a readable background on what the case was all about. In my opinion they said pretty much what hermannr wrote that you cannot sell what you do not own. The big question from what I could tell was who actually held the mortgage and when did they hold it. The other part was that the original owner of the property seemed to be left out of the foreclosure proceedings and was not properly notified nor given the chance to pay off the original mortgage or make settlement on it. The new owner was aware of that and was trying to make a quitclaim on the property through adverse possession.

    I know the laws vary from state to state but if you take over property from someone without their consent or knowlege such as tax sales the original owner has a certain time such as 7 years to reclaim the property by clearing up the original debt and the person who has tried to take over the property is just out of luck with any investment he has made on it. One of the legal problems that Fannie Mae and some others are running into is that when a person buys a home and borrows the money from a local bank. The local bank is the holder of the mortgage and the borrower is obligated only to that bank even if they sell the loan unless the borrower agreed to allow them to sell it before taking out the loan. Only the local bank can foreclose on the home if payments are not made.

    I don't know if all of the foreclosures for the last five years have been illegal as the writer of the article seems to say but this could get messy in court if the foreclosures were not legit and proper. However even if the foreclosure was not perfectly legal it just means that the original owner of the home can get it back by clearing up the debt that they owed in the first place. It doesn't let them off the hook completely but just makes more billable hours for the attorneys.

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    Campaign Veteran skidmark's Avatar
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    in short, this seems to be the most important point of the decision:

    6. The land court correctly reasoned that the remedy available to Bevilacqua was not against the wrongly foreclosed homeowner but rather against the wrongly foreclosing bank and/or perhaps the servicer (depending on who actually conducted the foreclosure)
    In other words if you lost your house to a bank who illegally foreclosed on you, your recourse is against the bank and not with trying to move the current occupyer out of/off of the property. As a matter of fact the new occupyer also has recourse against the forclosing bank (and maybe the current financing institution as well) to make the title good and protect their (the occupyer's) interest in the property.

    As I read it there will not be re-foreclosures and buyers will not have to compete to re-buy their homes. Those that lost homes via illegally conducted foreclosures will try to recover their losses (old house value + additional expenses of new housing over and above what they would have paid if they had been able to stay put) by suing the bank that foreclosed on them. New (current) occupyers will sue at least one and maybe many banks/lending institutions/financing institutions for the costs of making the title good. That seems to be something that will have to wait until the foreclosed person recovers from the foreclosing bank who will then recover good title to transfer down the line to the current occupyer who will thus become the new owner of a valid title to the property.

    As the article suggests, doing it any other way will throw not only the Massachusetts real estate market into permanent disarray but will cloud the national scene as well. All I can say is that this will certainly cause banks/lenders all across the board to find some way to recover at least some of their losses via fees charged against consumers. BOHICA, folks.

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    Regular Member hermannr's Avatar
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    As we all look at this, remember one thing to chew on: That title insurance you paid for when you purchased your house? It protects the SELLER, the title insurance is a guarantee that the seller in fact holds legal title (with stated reservations like mineral rights etc) and can transfer that title to you.

    If the title turns out to be invalid, the title insurance has to pay up. That is one reason you do not sue the seller, you sue the financial institution and the Title Insurance company. (as stated in the comments on ruling..they can sue the financial institution, not the present owner of the property)

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    IMO, what's really too bad about this whole thing is the people that believe their house is an asset, when in fact it is a liability. And a rather large one at that.

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    Campaign Veteran since9's Avatar
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    Quote Originally Posted by Oramac View Post
    IMO, what's really too bad about this whole thing is the people that believe their house is an asset, when in fact it is a liability. And a rather large one at that.
    Depends on if they own it outright or not. Insurance covers legal liability. Financial liability is largely covered by simply keeping it up.
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    Quote Originally Posted by since9 View Post
    Depends on if they own it outright or not. Insurance covers legal liability. Financial liability is largely covered by simply keeping it up.
    True, and true. However, the point of it being a liability rather than an asset is the "keeping it up" part. You spend money to maintain the condition, and thus the value. And because of that it is a liability. Now, improving it is another matter, and can lessen the liability significantly. But keep in mind that you're still spending money that you MIGHT get back IF you sell the house. And like you say, if you own it outright, that makes a HUGE difference.

    I'm not saying that owning a house is a bad thing, just pointing out that it's not nearly the asset that most people think it to be.

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    Campaign Veteran since9's Avatar
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    Quote Originally Posted by Oramac View Post
    True, and true. However, the point of it being a liability rather than an asset is the "keeping it up" part. You spend money to maintain the condition, and thus the value. And because of that it is a liability. Now, improving it is another matter, and can lessen the liability significantly. But keep in mind that you're still spending money that you MIGHT get back IF you sell the house. And like you say, if you own it outright, that makes a HUGE difference.

    I'm not saying that owning a house is a bad thing, just pointing out that it's not nearly the asset that most people think it to be.
    From an accounting/financial point of view, a liability is something you already owe, so maintenance and upkeep aren't liabilities. They're expenses. Preventative maintenance is far cheaper than the cost of restorative maintenance. I owned a house where the kitchen bay window was an afterthought by the builder. As such, it was flush with the facia, and had developed a leak which had rotted some of the underlying wood. I tore it apart, replaced the rotting wood, and constructed an extension of the shingled roof which protected it from constant wetting.

    Meanwhile, an asset is something of value. Whatever portion of your home is owned by you is an asset: Market value - outstanding mortgage balance. Owner's Equity = Assets - Liabilities. It's a net liability only if you're underwater (owe more than it's worth). You can borrow against an asset. If your home is underwater, you cannot borrow against it.

    Period expenses required to keep an asset in good condition are not liabilities. They're simply expenses, same as rent or homeowner association fees.
    Last edited by since9; 10-28-2011 at 02:00 PM.
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