Friday, October 09, 2009

Motion to Reconsider on "Defective Foreclosure" case

Today’s Globe has a prominent story (“Foreclosure sales in limbo over title issue”) on the impact that a March 2009 Land Court ruling has had on property sales across the state. The ruling (here, in PDF form) addressed three similar cases brought by lenders to “remove a cloud from the title” of properties that had been foreclosed. In each case, the lender had conducted (or at least commenced) foreclosure proceedings before the document assigning the mortgage being foreclosed to the entity conducting the foreclosure was recorded at the registry of deeds. The Court ruled that such a situation left a defect in the title, reasoning that at a minimum, having such ambiguous documentation of the mortgage at the start of the foreclosure could suppress possible bidders to the detriment of the borrower/property owner who is indebted to the lender. (Our previous post on this case is here).

The Globe story reports that this case has stifled efforts by many municipalities, non-profits, and regular home buyers to purchase previously foreclosed homes. Because of this – and because the practice ruled improper by the case was so widespread – the plaintiffs in the case have asked the judge to reconsider his ruling. His decision on that motion may be released today.

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