'Toxic Titles' Make Mortgage Foreclosures a Lot More Complex
Already dealing with a deluge of mortgage foreclosures, courts in Massachusetts now have a new problem. And, although litigation over the issue is farther along there than in a number of other states, it’s a growing concern that is also affecting other properties throughout the country.
So-called toxic titles created by the packaging of multiple mortgages into securitized bundles for resale to multiple investors have raised legal questions about who actually owns homes in foreclosure and what procedure is required to transfer title to the mortgage lender, according to the Boston Globe.
In Massachusetts, a decision in March by Justice Keith Long of Massachusetts Land Court put banks on the defensive and offered new hope to struggling homeowners as he held that defective proof of ownership could derail a foreclosure, the newspaper reports. That has put the ownership rights of some who have already purchased foreclosed homes in limbo, and slowed down the litigation process for those still in the pipeline as lenders scramble to document ownership.
A motion for reconsideration was filed and a new decision from Long on the issue is expected shortly, the newspaper reports.
“The fundamental problem is the paperwork was really shoddy,’’ says Kathleen Engel, a law professor at Suffolk University. “The mess was created by Wall Street.’’
Related coverage:
ABAJournal.com: “Faced With Foreclosure, Homeowners Can’t Get Lawyers to Help”
