How foreclosures failed the legal test

Law of the Land

In two separate, but similar, cases that both took place on July 5, 2007, U.S. Bank and Wells Fargo both foreclosed on the homes of borrowers who had defaulted on their home loans. Both properties were auctioned at foreclosure sale and, when there were no takers, the two banks purchased the respective properties themselves, according to court filings.

The fact patterns of the two properties’ mortgages were similar. In both cases, the banks that originated the mortgages sold and assigned the loans to another bank, after which both loans were sold and assigned several times.

Some of these sequential assignments were "in blank," meaning the seller of the mortgage actually executed an assignment form leaving the assignee’s name blank, filling in the assignee’s name later.

Eventually, these loans were securitized, meaning they were bought and sold in a package with hundreds of other mortgages. These packages, containing the two mortgages at issue, were eventually purchased by U.S. Bank and Wells Fargo.