Understanding the Ibanez Opening: Foreclosure Irregularities at the Forefront in 2011

Amid a 2010 marred by some of the highest foreclosure rates ever recorded, came the news that many of the nation’s largest mortgage lenders had been forced to suspend foreclosure proceedings following charges that these same “mega mortgage-holders” rushed the recordation process by forcing thousands of borrowers from their “home sweet homes” without the appropriate documentation to do so.

Well, welcome to 2011, a year when many experts believe nationwide foreclosures will reach their peak, just as state courts are finding themselves tasked with determining whether many of these actions are the result of banks jumping the proverbial gun on the foreclosure process.

In fact, just a few weeks ago, the Supreme Judicial Court of Massachusetts, the state’s highest court, ruled in U.S. bank v. Ibanez that U.S. Bancorp and Wells Fargo erred in ’07 when they seized a couple of beleaguered borrowers’ properties, concluding that these giants of the lending industry had not only failed to prove they had the right to evict the homeowners in question, but also that the foreclosures should be voided and homes returned to those borrowers. Ibanez—the first ruling from a state’s highest court on this national hot button issue of lender impropriety—has the effect of putting all of the nation’s banks on notice that foreclosures “cannot be based on improper or incomplete paperwork,” and “opening the door to other foreclosure do-overs” in Massachusetts.

Or at least that’s the word from Gretchen Morgenson’s New York Times report finding “While it is common now for borrowers to question whether banks moving to seize their properties have the right to do so, in 2007, most borrowers assumed that the institutions foreclosing on them were acting properly. Since then, lenders’ foreclosure practices have come under intense scrutiny. Borrowers’ advocates have argued that lenders flouted private property rights in their rush to foreclose on troubled borrowers. As lenders and Wall Street firms bundled thousands of mortgage loans into securities, banks often failed to record each link in the chain of documents demonstrating ownership of a note and a property.”

Even though Ibanez doesn’t serve as precedent in other states, the types of failures in the foreclosure recordation process that led to this Massachusetts decision have apparently been affecting average Americans nationwide. As Morgenson found, “attorneys general in all 50 states are investigating foreclosure improprieties, which include forged signatures on legal documents and other dubious practices meant to patch up holes in loan documentation.” As a result, the implication is that there will most certainly be more cases like this popping up in other areas of the country—including North Carolina—with courts welcoming a just resolution to these types of plaguing ownership problems.

And so, as we all wait to see what this holding could eventually hold for North Carolina cases—a state with similar land registration laws as Massachusetts—it is essential to understand that a good bankruptcy attorney can be the best line of defense against an improper foreclosure, policing your mortgage lender’s proper chain of title and making sure they dot the i’s and cross the t’s on often predatory foreclosure practices.

Are you delinquent in your mortgage and facing foreclosure in 2011? Unsure how to fight it? If so, are you ready to avoid the perilous scandals, stops and starts of the foreclosure process? Well, join many American homeowners who are finding immediate assistance against lender abuse and a more permanent solution to keep their hard-hit homes. The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to +1-833-627-0115, or make your own appointment online at www.billsbills.com.