The highest court in Massachussetts has invalidated foreclosures initiated by Wells Fargo Bank and U.S. Bank, saying the banks failed to prove in court that they they owned the mortgages and thus had legal standing to seize the homes.
The ruling in twin cases involved mortgages that were sold off and pooled with other loans in complex processes to create mortgage-backed securities, a type of bond widely traded by investors worldwide.
It's another setback for the home lending industry, which has been rocked by such disclosures as 'robosigning' - the practice at big banks of having employees certify in court to facts underlying foreclosures without taking the time to read the supporting paperwork.
