SJC Upholds Ibanez Foreclosure Decision

In US Bank National Association v. Ibanez, 458 Mass. 637, the Supreme Judicial Court today upheld the ruling of the Land Court (MISC 08-384283) regarding the requirement that mortgage holders must be accurately identified in a foreclosure proceeding. "We agree with the judge that the plaintiffs, who were not the original mortgagees, failed to make the required showing that they were the holders of the mortgages at the time of foreclosure. As a result, they did not demonstrate that the foreclosure sales were valid to convey title to the subject properties, and their requests for a declaration of clear title were properly denied."
Specifically, the court held:

1. "Assignments in blank.... identifying the assignor but not the assignee, ... did not constitute a lawful assignment of the mortgages."
2. "In the absence of a valid written assignment of a mortgage or a court order of assignment, the mortgage holder remains unchanged."
3. "A postforeclosure assignment [may not] be treated as a pre-foreclosure assignment simply by declaring an "effective date" that precedes the notice of sale and foreclosure... Because an assignment of a mortgage is a transfer of legal title, it becomes effective with respect to the power of sale only on the transfer; it cannot become effective before the transfer."
4. This ruling will not be prospective in its application. " 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."