Jan. 7 (Bloomberg) -- US Bancorp and Wells Fargo & Co. lost a foreclosure case in Massachusetts’s highest court that will guide lower courts in that state and may influence others in the clash between bank practices and state real estate law.
The state Supreme Judicial Court today upheld a judge’s decision saying two foreclosures were invalid because the banks didn’t prove they owned the mortgages.
“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,” Justice Ralph D. Gants wrote. The court upheld a decision by Massachusetts Land Court Judge Keith C. Long in Boston.
Wells Fargo and US Bancorp fell almost 1 percent on news of the decision. San Francisco-based Wells Fargo, the fourth- largest U.S. lender by assets, dropped 36 cents to $31.79 at 10:44 a.m. in New York Stock Exchange composite trading. US Bancorp was down 20 cents to $26.09.
Teri Charest, a spokeswoman for US Bancorp, didn’t immediately return a call for comment. Jason Menke, a spokesman for Wells Fargo, didn’t have an immediate comment.
Charest previously referred questions on the case to the loan servicer for both mortgage-backed trusts, American Home Mortgage Servicing Inc. Philippa Brown, a spokeswoman for Coppell, Texas-based American Home Mortgage, didn’t have an immediate comment.
The case is U.S. Bank v. Ibanez, 10694, Supreme Judicial Court of Massachusetts (Boston). The lower-court cases are U.S. Bank National Association v. Ibanez, 08-Misc-384283, and Wells Fargo Bank NA v. LaRace, 08-Misc-386755, Commonwealth of Massachusetts, Trial Court, Land Court Department (Boston).
