State Court Voids Home Sale Due to Improper Foreclosure

A Massachusetts man lost something he never had – his home. The Masachusetts Supreme Judicial Court ruled this week that when Francis Bevilacqua purchased the home from U.S. Bank in 2006, the bank did not actually hold the home’s title. The court ruled that because U.S. bank did not hold the mortgage note when it foreclosed on the property, it did not obtain the title in the foreclosure. Therefore, Bevilacqua did not purchase a legal title when he made the purchase. In its ruling in Bevilacqua v. Rodriguez, the court referenced a case tried in the same court last January, U.S. Bank, N.A. v. Ibanez, in which the court ruled that if a bank cannot provide proof it owns the mortgage note, any foreclosure filings it initiates are void. The Ibanez case, however, simply involved a foreclosure action. Bevilacqua extends that ruling to instances when a new homeowner has already purchased the property. “As we recently held in the Ibanez case, Massachusetts ‘adhere[s] to the familiar rule that ‘one who sells under a power [of sale] must follow strictly its terms’‘ so, where a foreclosure sale occurs in the absence of authority, ‘there is no valid execution of the power, and the sale is wholly void,’” the court wrote. “This case is just one example of a much larger problem,” stated Massachusetts Attorney General Martha Coakley in response to the ruling. “In the rush to foreclose, the banks’ reckless origination and foreclosure practices have created a domino effect that has harmed Massachusetts homeowners as well as third-party purchasers who purchased properties after foreclosure.” “This is yet another clear demonstration that the only way we are going to restore a healthy economy is to address the foreclosure crisis and hold the banks accountable for their actions,” she continued.