US Bancorp and Wells Fargo & Co. lost a foreclosure case in Massachusetts' highest court last week that will likely make foreclosures more difficult in Massachusetts, and could also influence other courts in the clash between bank foreclosure practices and state real estate law.

The state Supreme Judicial Court upheld a judge's decision holding that two foreclosures were invalid because the banks did not prove they owned the mortgages. In both cases, the mortgage was pooled with other mortgages into a trust and converted into mortgage-backed securities that can be bought and sold by investors. US Bank was the trustee of one of the trusts, and Wells Fargo was the trustee of the other trust. In both cases, the back-up documentation provided to the court did not clearly demonstrate that the mortgage had been transferred to the trust. In fact, in both cases a written assignment of the mortgage to the trust was executed and recorded months after the completion of the foreclosure. The assignment to Wells Fargo as trustee declared an effective date that preceded the publication of the notice of sale (one of the conditions for a foreclosure in Massachusetts) and the foreclosure sale. In upholding the lower court's decision, the court stated that "the judge did not err in concluding that the securitization documents submitted by [US Bank and Wells Fargo] failed to demonstrate that they were the holders of the...mortgages...at the time of the publication of the notices [of sale] and the sales. The judge, therefore, did not err in rendering judgments against [US Bank and Wells Fargo]." A judge in a concurring opinion added that he was surprised by "the utter carelessness with which [US Bank and Wells Fargo] documented the titles to their assets."