Two of the US's biggest mortgage lenders have had mortgage foreclosures cancelled in a case that could affect other banks. The Supreme Court in Massachusetts ruled against US Bancorp and Wells Fargo in a widely watched case. Backing a lower court ruling made in 2009, it said two foreclosure sales were invalid because the banks did not prove that they owned them at the time. The decision is among the earliest to address the validity of foreclosures done without proper documentation - so-called robo-loans because they were carried out by people who were unqualified and who often did not check a single line in the paperwork. Marty Mosby, an analyst at Guggenheim Securities said: A ruling like this will slow down the foreclosure process. They're going to have to be really precise and get everything in order. It doesn't leave a lot of wiggle room." The case also applies retrospectively to people who have already been foreclosed. Glenn Russell, a lawyer for one of the couples in the case said: "I'm ecstatic. The fact the decision applies retroactively could mean thousands of homeowners can seek recovery for homes wrongfully foreclosed upon." Analysts said the decision may also threaten banks' ability to package mortgages into securities, and may raise the spectre that loans transferred improperly will need to be bought back.
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