A look at stories across HousingWire’s weekend desk, with more coverage to come on bigger issues:
The Securities and Exchange Commission is studying Standard & Poor’s decision in July 2011 to pull its ratings on a $1.5 billion commercial mortgage-backed security, The Wall Street Journal reported Sunday.
The paper claims it was a last minute decision related to a CMBS deal issued by Goldman Sachs (GS) and Citigroup (C) The sudden change by S&P angered investors and issuers.
The SEC’s inquiry is part of its annual review of S&P and other credit ratings firms. (S&P hasn’t been accused of any wrongdoing.) But in S&P’s case regulators are looking at whether it used more lenient standards to rate new CMBS than it used on outstanding deals, the current and former employees say, according to the WSJ.
The Massachusetts Supreme Court ruled Friday that a foreclosing lender must hold both the mortgage and underlying note to the property for a foreclosure sale to be valid.
While the decision in certain respects is a blow to financial institutions, the court derailed an onslaught of future lawsuits on already completed foreclosures by saying the court’s interpretation does not grandfather in past disputes on the same issue.
At the same time, part of the decision seems to validate the role the Mortgage Electronic Registration Systems registry plays as the listed assignee on many mortgages.
The court said it interprets state law as saying it permits “one who, although not the note holder himself, acts as the authorized agent of the note holder, to stand in the shoes of the mortgagee as the term is used in these provisions.”
The court also said that it disagreed with the lower court and said the Supreme Court “does not conclude that a foreclosing mortgagee must have (actual) physical possession of the mortgage note in order to effect a valid foreclosure.”
Those provisions tend to validate MERS role as assignee since there are generally disputes over MERS role in the process.
The facts of the case revolve around plaintiff Henrietta Eaton, who claimed her home was wrongfully foreclosed on by servicer Tree Servicing (or Green Tree) even though the entity had no debt supporting its motion and only a mortgage assignment securing a loan originated by BankUnited (BKU).
The case was filed after Fannie Mae, one of the listed defendants, ended up buying the property at Green Tree’s foreclosure sale and filing eviction papers against Eaton. Eaton pushed back in a lawsuit saying Fannie Mae had no eviction rights because the foreclosure sale was never valid due to the fact that Green Tree didn’t hold the note when the action was taken.
And finally, the Federal Deposit Insurance Corp. did not report any new bank closings for the week ending June 22.
