January 24, 2011
On January 7, in a ruling that will likely affect the entire banking industry, the Massachusetts Supreme Judicial Court found that Wells Fargo and US Bancorp had wrongly foreclosed on two homes because the banks could not prove that they owned the mortgages at the time of the foreclosure sales in July 2007. Co-counsel Max Weinstein, a clinical instructor at the Wilmer Hale Legal Services Center, represented one of the mortgagers, Antonio Ibanez.
Weinstein explained that the banks brought the case because they were concerned that they had published notice of foreclosures in the wrong paper, as the notices were published in the Boston Globe instead of local paper in Springfield, where the mortgagers lived. The banks served their complaint on the properties that were foreclosed and, as Ibanez was not currently residing in the property, he did not respond to the complaint and initially defaulted.
Massachusetts Land Court Judge Keith Long noticed that the assignments of the mortgages on which the foreclosures had been conducted were dated after the foreclosures took place, so he entered judgment against the banks, notwithstanding the fact that Ibanez had defaulted. Weinstein became involved in the case upon learning of Judge Long’s decisions, and sought out Ibanez because Weinstein recognized that the banks were likely to appeal the decision and Ibanez would need the assistance of competent counsel.
On appeal, the Supreme Judicial Court affirmed the lower court ruling that the banks acquired the mortgages by assignment only after the foreclosure sales and thus had no interest in the mortgages being foreclosed at the time of the sale.
“This decision will affect thousands of homeowners across the state who have lost their home for foreclosure to entities that had no right to conduct the foreclosure auction,” Weinstein said. “Many of the homeowners don’t have the resources and abilities to challenge these kinds of practices without counsel, but hopefully this decision will give some aid to people who ordinarily wouldn’t be able to challenge foreclosures.”
After the ruling was issued, both banks’ stock declined. The banking industry was paying close attention to this case, because homeowners across the country have challenged foreclosures that were brought by banks using flawed practices and improper documentation.
Since 2008, Weinstein has been a clinical instructor in the Predatory Lending/Consumer Protection Clinic at the WilmerHale Legal Services Center. His practice focuses on the deceptive and unfair marketing and underwriting of sub-prime mortgages that gave rise to the housing bubble and the foreclosure crisis. He currently represents low- and moderate-income homeowners in numerous state and federal lawsuits against sub-prime mortgage lenders, their assignees, brokers and attorneys, for violations of consumer protection law.
Weinstein is co-teaching, with Roger Bertling, the clinical workshop Predatory Lending and Consumer Protection in the 2010/2011 academic year.
— Jill Greenfield