Wells Fargo (NYSE:WFC), US Bancorp (NYSE:USB) Lose Foreclosure Case - Ramifications?

Massachusetts' highest court told Wells Fargo (NYSE:WFC) and US Bancorp (NYSE:UBS) their seizure of two homes wouldn't be allowed after they failed to prove they owned the mortgages at the time of the seizure.

The court effectively voided the seizure of the two homes, generating possible ramifications across the U.S. market concerning foreclosures.

What this basically does is slow down the foreclosure process and force the banks to get their documentation in order.

Justice Ralph Gants wrote for the Massachusetts court, saying the two banks "failed to make the required showing that they were the holders of the mortgages at the time of foreclosure."

All 50 U.S. states are looking at cases like this one, and investigating whether people are being improperly removed from their homes.

Other than slowing down the foreclosure process, the other ramification is the effect on the practice of packaging mortgages into securities to be sold on the market.

The safety of the underlying securities could continually be under suspicion if they loans were wrongly transferred.