U.S. Bancorp, Wells Fargo lose pivotal foreclosure case

The highest court in Massachusetts ruled against U.S. Bancorp and Wells Fargo & Co. on Friday in a pivotal mortgage foreclosure case that could spark more turmoil and uncertainty in the housing market.

The Supreme Judicial Court affirmed a lower court judge’s ruling invalidating two mortgage foreclosure sales because the banks, in their capacity as trustees for mortgage securities, did not prove they actually owned the mortgages at the time of foreclosure.

The decision, which highlights the failure of financial firms to adhere to the rules that govern mortgage-backed securities, is likely to lead more borrowers to sue bank servicers and trustees for wrongful foreclosures. It’s unclear what the ruling means for people who were forced from their homes after defaulting on their loans or for those who bought houses in foreclosure sales.

Last fall, the banking industry’s foreclosure machine came under intense scrutiny with revelations that low-level employees called “robo signers” powered through hundreds of foreclosure affidavits a day without verifying a single sentence.

“This decision is going to raise serious problems in hundreds of thousands of foreclosure cases,” said homeowner defense attorney Thomas Cox of Maine, who was one of the first to put the robo-signing scandal in the spotlight.

The banks argued that the documents they submitted were sufficient to prove they owned the mortgages. 

Nantucket Sound wind farm wins final federal permits

The nation’s first offshore wind farm has won its final federal permits, 10 years after the project was proposed.

On Friday, the U.S. Environmental Protection Agency gave the Cape Wind project a permit for emissions during construction. That came a day after Cape Wind received a permit from the U.S. Army Corps of Engineers for work in navigable federal waters and to ensure it’s complying with the Clean Water Act.

Neither decision was a surprise, but the permits allow the company to start construction.

The company plans to start building a 130-turbine wind farm in Nantucket Sound by the end of the year and begin producing power by early 2013.

The project still faces numerous lawsuits from opponents. 

Justice Department clears FirstEnergy-Allegheny deal

FirstEnergy Corp. and Allegheny Energy Inc. on Friday said the Justice Department notified them that it has completed its review of the companies’ proposed combination.

FirstEnergy, based in Akron, Ohio, said in February 2010 it would buy Allegheny Energy, based in Greensburg, Pa., in a $4.7 billion stock deal.

The new company will be made up of 10 utilities serving 6.1 million customers from Ohio to New Jersey and south to Virginia.

FirstEnergy also will assume Allegheny’s debt. In its third-quarter earnings release, Allegheny listed $4.55 billion in long-term debt.

FirstEnergy shares gained 9 cents Friday, closing at $38.25. Allegheny shares added 10 cents to close at $25.15. 

Tenet Healthcare fighting buyout bid with ‘poison pill’

Hospital operator Tenet Healthcare Corp. said Friday it is adopting a “poison pill” stock distribution measure as it tries to fight off a $3 billion takeover bid by rival Community Health Systems Inc.

Under the measure, if any person or firm buys more than 4.9 percent of Tenet’s stock, shareholders who own less than 4.9 percent of the company’s stock will get the right to buy one additional share for every share they own. The Dallas company said it will take effect Jan. 17.

A poison-pill measure defends against takeovers by diluting the holdings of the would-be acquirer.

Community Health, based in Franklin, Tenn., went public with its cash-and-stock bid for Tenet last month. The offer values Tenet at $6 per share, and Tenet says that is too low.