Secretary of State Galvin Files Legislation To Resolve Faulty Foreclosures After U.S. Bank v. Ibanez Ruling

by Rich Vetstein on January 27, 2011

in Foreclosure, Massachusetts Real Estate Law, Mortgage Crisis, Mortgages

From the Lawrence (Mass.) Eagle Tribune:

Massachusetts Secretary of State William Galvin filed legislation last Friday to give the Land Court authority to create a special master to deal with foreclosures that may have occurred improperly. Anyone seeking to challenge the legitimacy of a foreclosure would have one year to file a lawsuit in the court.

Galvin’s bill follows a Supreme Judicial Court decision in U.S. Bank v. Ibanez, upholding a 2009 Land Court ruling that a bank or lender must have proper documentation proving it holds a title before foreclosing on a home.

“It’s opened the door to anyone that wants to question a foreclosure that’s already moved forward,” Galvin said of the decision. As the secretary of state, Galvin is the state’s register of deeds. Galvin’s bill will go to the Legislature for debate.

The special court could play host to homeowners who purchased a foreclosed home staking claim against a former homeowner who may have faced an improper foreclosure. Galvin pointed out that about 40,000 foreclosures have taken place in Massachusetts since 2006.

“I doubt that half of them are going to be involved in this,” Galvin said. “I don’t know if it’s 5 percent. But if it’s 5 percent, that’s 2,000 properties.”

Depending on the numbers of foreclosure affected, this may be a step in the right direction–as long as homeowners are able to obtain clear title and get reimbursement of any out of pocket expenses dealing with a problem they didn’t create. As with any special court or master, there’s always a short statute of limitations imposed. So we’ll keep an eye out on that.

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