NEW YORK (Reuters) – Wells Fargo & Co and US Bancorp lost a ruling by Massachusetts’ top court on Friday that found the banks failed to show they held the mortgages at the time they foreclosed on two homes.
The ruling could cause other foreclosure sales to be invalidated, especially where lenders may not have all of the underlying documentation.
It may also be significant in the realm of securitization, where mortgages are packaged into securities to be sold to investors.
In midday trading, Wells Fargo shares were down $1.03 or 3.2 percent at $31.12, while U.S. Bancorp shares were down 1.3 percent at $25.95.
The KBW Bank Index, which includes both lenders, was down 1.7 percent.
Representatives of U.S. Bancorp and Wells Fargo did not immediately return calls seeking comment on the court decision.
Attorneys general in all 50 U.S. states are examining foreclosure practices, including whether lenders are forcing people out of their homes despite incomplete documentation.
The cases are U.S. Bank N.A. v. Ibanez and Wells Fargo Bank NA v. LaRace et al, Massachusetts Supreme Judicial Court, No.
(Reporting by Jonathan Stempel; Editing by Lisa Von Ahn and Matthew Lewis)