A Springfield, MA Land Court judge's ruling that two banks improperly seized two properties in foreclosure has halted the sale of many bank-owned properties across the state, the Boston Herald reported June 9, 2009.
"Experts say Land Court Judge Richard Long’s recent decision to void two
Springfield-area foreclosures over procedural flaws has gummed up resale of
foreclosed homes across the state."
One local listing agent that sells mainly bank-owned properties told the Herald that, "It’s just stopped everything," and 12 of her sales have been halted since the ruling.
Due to the judge's decision, title insurance companies are not willing to write lender's or owner's title insurance policies. Without the availability of a lender's policy, lenders are not willing to provide financing on such deals.
"The judge found that the banks held foreclosure auctions even though both lacked
documents at the time proving that they really owned the homeowners’ mortgages.
That 'clouded' each property’s title, discouraging any third party from bidding
on the homes, Long ruled."
I have a similar situation regarding a sale of a single-family home in Tewksbury, MA. My buyer agreed to purchase the property from an investor who bought the property from a bank. For the same reasons as in the Springfield court case, the property has a defective title. We are waiting for the outcome of the case.
"Experts say paperwork flaws are common in foreclosures these days, as mortgages
often changed hands over and over again during the 1998-2005 housing boom. Any
missing paperwork can call into question whether a bank really owned a loan it
foreclosed upon."
Read The Boston Herald Article
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