US Bank and Wells Fargo Lose Big: Ibanez Slip Opinion

There was no prior assignment for the banks to confirm by the late-filed assignment.  The securitization agreements contained language of future intent, not the present intent to convey.  Full opinion here:1 07 11 Massachusetts-Supreme-Court-Opinion-against-banks-in-land-title-records-u-s-Bank-v-Ibanez-Sjc-Slip-Opinion-1-7-2011

Here’s the holding and the concurring opinion:

Finally, we reject the plaintiffs’ request that our ruling be prospective in its application. A
prospective ruling is only appropriate, in limited circumstances, when we make a
significant change in the common law. See Papadopoulos v. Target Corp., 457 Mass.
368, 384 (2010) (noting “normal rule of retroactivity”); Payton v. Abbott Labs, 386 Mass.
540, 565 (1982). We have not done so here. The legal principles and requirements we set
forth are well established in our case law and our statutes. All that has changed is the
plaintiffs’ apparent failure to abide by those principles and requirements in the rush to sell
mortgage-backed securities.
Conclusion. For the reasons stated, we agree with the judge that the plaintiffs did not
demonstrate that they were the holders of the Ibanez and LaRace mortgages at the time
that they foreclosed these properties, and therefore failed to demonstrate that they
acquired fee simple title to these properties by purchasing them at the foreclosure sale.
Judgments affirmed.
CORDY, J. (concurring, with whom Botsford, J., joins).
I concur fully in the opinion of the court, and write separately only to underscore thatwhat is surprising about these cases is not the statement of principles articulated by the
court regarding title law and the law of foreclosure in Massachusetts, but rather the utter
carelessness with which the plaintiff banks documented the titles to their assets. There is
no dispute that the mortgagors of the properties in question had defaulted on their
obligations, and that the mortgaged properties were subject to foreclosure. Before
commencing such an action, however, the holder of an assigned mortgage needs to take
care to ensure that his legal paperwork is in order. Although there was no apparent actual
unfairness here to the mortgagors, that is not the point. Foreclosure is a powerful act with
significant consequences, and Massachusetts law has always required that it proceed
strictly in accord with the statutes that govern it. As the opinion of the court notes, such
strict compliance is necessary because Massachusetts is both a title theory State and
allows for extrajudicial foreclosure.
The type of sophisticated transactions leading up to the accumulation of the notes and
mortgages in question in these cases and their securitization, and, ultimately the sale of
mortgaged-backed securities, are not barred nor even burdened by the requirements of
Massachusetts law. The plaintiff banks, who brought these cases to clear the titles that
they acquired at their own foreclosure sales, have simply failed to prove that the
underlying assignments of the mortgages that they allege (and would have) entitled them
to foreclose ever existed in any legally cognizable form before they exercised the power
of sale that accompanies those assignments. The court’s opinion clearly states that such
assignments do not need to be in recordable form or recorded before the foreclosure, but
they do have to have been effectuated.

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