This ruling will also send every other bank to do a thorough review of the papers they need to show legal ownership of the debt they are claiming is owed them - they will cover themselves as a result of this ruling. The financial world will not come to a grinding halt as a result of this legal case.
Those people who fell behind on their payments will still loose their houses, but DB won't get the claim they thought they would.
Ding, ding, ding - we have a winnah...
Don’t say that! It will interrupt the orgasm of the doomsayers who get off on turmoil.
They can only lose their homes if they lose them TO a party which a court agrees has the right to take ownership of the home. Given that places like DB haven’t bothered keeping track of paperwork, imagine all the high-volume mortgage origination shops, many of which are in or on the verge of bankruptcy, whose employees have mostly been laid off, etc. A lot of the job of tracing the notes will need to start in those places (especially when the attempt to trace from the other end of the line has failed). Lotsa luck finding anyone to help there!
First of all, I don't know what "loose their houses" means, so I can't comment on that part of your post. What I can comment on is that these home-renters will not be evicted from their homes until the same issue is proved: i.e. some financial entity demonstrating legal title to the properties. Pretty unlikely the current residents will stay in the houses in perpetuity, but a good chance they will enjoy the next few months rent-free. And I do think this court decision may be the breaker of the financial industry's back, so to speak. Wouldn't mind to see Chitty-bank, Banco Des Las Americas and others take the pipe on this.
The financial world will not, as you say, come to a grinding halt as a result of this ruling; however, this ruling does have some more than trivial implications.
First, it will likely increase the time needed for some banks to foreclose on some props. Which only means, that there is a longer window during which loans already known as bad will have ZERO collateral behind them. This also means that said banks will be a tad more likely to be liable for unpaid property taxes (should the fork’ed props remain unsold) and that perhaps the loans will be a month or two more in arrears than they might have been had the bank(s) been able to foreclose (and hopefully resell) quickly.
Secondly, these tranches of debt were sliced in such arcane ways that legal skirmishes might well develop as to whom the property truly belongs. IOW, who really has the right to foreclose if a particular tranche was sliced in a way that just happened to apportion one specific home/prop in an odd way...bank A with 33% of the note, or bank B with 26%, or bank C with 41%. That’s probably only a slight exaggeration, not a ridiculous outlier example.
The banks, therefore, are almost certainly going to incur increased costs processing these properties. So yeah, not the end of the world, just increased hassle for the banks trying to offload this stuff.