Media Advisory: Heartland Legal Expert Comments on Massachusetts Supreme Court Ruling on Foreclosures

Published January 7, 2011

The Massachusetts Supreme Court today ruled against banks seeking a declaration that their foreclosures against two homeowners were valid even though the banks did not own the mortgages at the time of the foreclosures.

Foreclosures in Massachusetts do not need judicial approval, unlike the situation in about 23 other states. Instead, foreclosures take place under the mortgage terms, outside of court. US Bancorp and Wells Fargo & Co. had foreclosed on two properties in Massachusetts before assignments of the mortgages took place and sought court approval to clarify the foreclosures were nevertheless valid.

The Court held the foreclosures invalid because neither bank owned the mortgages at the time of the foreclosure sale.  This was a requirement in the mortgage document that must be strictly followed, the court held.

Maureen Martin, senior fellow for legal affairs at The Heartland Institute, offers the following comments. You may quote from them directly, or contact her for more information.

“The two banks in this case sought judicial cover for sloppy paperwork, but the Massachusetts Supreme Court rightly refused to provide it. Particularly in states like Massachusetts, where foreclosures take place without judicial oversight, it is important for mortgage provisions authorizing such extra-judicial sales to be strictly enforced, and that’s exactly what the court held.

“This ruling is embarrassing for the banks, whose tortured and failed attempts to prove ownership of two single mortgages in this case included hundreds of pages of documents, many unsigned and others incomplete when executed. The case provides an up-close demonstration of what we already knew – that Wall Street bundled mortgages into mortgage-backed securities incompetently.”

Maureen Martin, J.D.
Senior Fellow for Legal Affairs
The Heartland Institute
[email protected]
(920) 229-6670

The Heartland Institute is a 26-year-old national nonprofit organization based in Chicago. Its mission is to discover, develop, and promote free-market solutions to social and economic problems. For more information, visit our Web site at or call 312/377-4000.