(Reuters) - In a decision that may slow foreclosures nationwide,
Massachusetts' highest court voided the seizure of two homes by Wells Fargo
& Co and US Bancorp after the banks failed to show they held the mortgages
at the time they foreclosed.
Bank shares fell, weighing on broader stock indexes, on fears the
decision could threaten lenders' ability to work through hundreds of
thousands of pending foreclosures.
The Supreme Judicial Court of Massachusetts' unanimous decision on Friday
upheld a lower court ruling. It is among the earliest cases to address the
validity of foreclosures done without proper documentation.
That issue, including the use of "robo-signers" who approved foreclosure
documents without reviewing them, last year prompted an uproar that led
lenders such as Bank of America Corp, JPMorgan Chase & Co and Ally Financial
Inc to temporarily stop seizing homes.
"A ruling like this will slow down the foreclosure process" for lenders,
said Marty Mosby, an analyst at Guggenheim Securities in Memphis, Tennessee.
"They're going to have to be really precise and get everything in order. It
doesn't leave a lot of wiggle room."
Wells Fargo and U.S. Bancorp lacked authority to foreclose after having
"failed to make the required showing that they were the holders of the
mortgages at the time of foreclosure," Justice Ralph Gants wrote for the
Massachusetts court.
