So When MA stripped the foreclosure buyer of property, he lands up owner of the mortgage instead.

[dkf]

The state’s highest court, in Bevilacqua v. Rodriguez, held that Francis Bevilacqua, who bought a foreclosed home from U.S. Bank in 2006, never actually obtained title to the property because the lender had filed for foreclosure a few weeks before it obtained an “assignment of mortgage” securing the loan. Sticking strictly to the form of the law, the court ruled that if U.S. Bank didn’t own the mortgage when it filed for foreclosure, then it couldn’t subsequently transfer title to Bevilacqua even though he paid for the property.
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The case has limited national implications because Massachusetts has an unusual, non-judicial mechanism for processing foreclosures, said Edward Rainen, a lawyer specializing in property law who also argued for the bank attorneys. In states where courts oversee all foreclosures, lenders usually must present all their various claims on the property at the same time in order to have the sale go through.
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The court did overrule a lower court’s decision that Bevilacqua had no claim on the property. Under Massachusetts law, when he gave the bank money for the property, the bank in effect transferred the mortgage to him along with the title. So while the title may be invalid, he can get it back by foreclosing again on the absent former owner. But that is a highly uncertain process that exposes him to the risk of losing his investment to an outside bidder, Graham said, and the high court gave no assurance it will work.
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One practical effect will be felt in Massachusetts immediately. Foreclosure buyers had better be ready to pay cash — and they will probably discount their offers further for the uncertainty there’s a snafu somewhere hiding in the title.

http://www.forbes.com/sites/danielfisher/2011/10/20/massachusetts-supreme-court-rules-foreclosure-buyer-got-nothing/2/

[ProgressiveProfessor]

1. Shouldn't title insurance have made him well at some point?

Particularly in those kind of deal TI is a must have.

[dkf]

5. Apparently If he paid cash he didn't need TI.

[ProgressiveProfessor]

6. Even when I have paid cash for properties, I had at least at title search if not insurance

The more unusual the deal, the more I insisted.

[dkf]

9. Would a title search uncover all these problems prior to purchase?

[ProgressiveProfessor]

10. Should have, the presuming there is TI, make you well if they screwed up.

[dkf]

11. But the title search can't catch robo signers or fraud right?

How's about problems with MERS or transfer of the loans? Do they track that paperwork/electronic record?

[virgogal]

2. What a goddamned mess.

[badtoworse]

3. Why would there be a bidding process if Bevilacqua forecloses?

He's not interested in recovering outstanding principal; he just wants the property.

[dkf]

4. Good question.

[FarCenter]

7. THE TYPICAL FORECLOSURE PROCESS IN MASSACHUSETTS

http://www.maapl.info/uploads/ForeclosureprocessinMA.pdf

The homeowner could make a payment, starting the clock again.
There is a notice period.
There is an auction.
Then the new owner has to evict the former homeowner (now a "tenant").
Then the new owner has to get a judgment from the former homeowner for any difference between sale proceeds and the mortgage amount.
Then the new owner has to collect, possibly by forcing the former homeowner into bankruptcy.

Messy process.

[badtoworse]

8. Thanks.

Is the auction intended to minimize the claim that the new owner would have against the former owner?