Foreclosure ruling drives down stock prices
Banking stocks were driven down today following a ruling against U.S. Bancorp and Wells Fargo & Co. in a pivotal Massachusetts foreclosure case that may shape policy in other states, Bloomberg reported.
The Massachusetts Supreme Judicial Court upheld a judge’s decision that two foreclosures were invalid because the banks didn’t prove they owned the mortgages. The judge said the mortgages were improperly transferred into two mortgage-backed trusts.
“We agree with the judge that the plaintiffs, who were not the original mortgagees, failed to make the required showing that they were the holders of the mortgages at the time of foreclosure,” Justice Ralph Gants wrote.
Wells Fargo stock fell $1.10, or 3.4 percent, to $31.05, and U.S. Bancorp shares declined 28 cents, or 1.1 percent, to $26.01 at 11:41 a.m. in New York Stock Exchange composite trading.
The KBW Bank Index, comprising 24 companies, fell as much as 2.2 percent after the decision was handed down.
Last year, claims of wrongdoing by banks and loan servicers sparked a 50-state investigation into whether hundreds of thousands of foreclosures were correctly recorded following the collapse of the housing market.