This web site was closely concerned within the combat to cease abusive and unwarranted foreclosures within the wake of the monetary disaster. As we’ll clarify quickly, one of many leaders on this combat, Maine lawyer Tom Cox, has instructed us that banks have engaged in a profitable marketing campaign to roll again hard-won borrower protections. That’s evidenced by a brand new Maine Supreme Court docket determination that overturned precedents to permit banks to relitigate claims they’d misplaced in opposition to mortgage debtors….which is barred for every other sort of authorized motion.
Foreclosures peaked in 2009 and 2010 in important measure on account of securitization producing value-destroying conduct. Within the stone age when banks held the mortgage they made, if a borrow bought behind on funds, the financial institution would modify the mortgage if the home-owner was nonetheless viable, as in might catch up (ideally) or pay a fairly excessive proportion of the funds due over time. The financial institution was usually higher served by getting half a loaf reasonably than none. Plus regulators took a dim view of REO (actual property owned, as in foreclosed houses) on a financial institution’s books, and a foreclosures would decrease the worth of houses close by, hurting the group. And for the reason that financial institution made new mortgages, it had the talents to change mortgages.
Against this, below the courageous new world of mortgage servicing, servicers had been set as much as drive delinquent mortgages into foreclosures. They had been paid to foreclose and to not modify mortgages; even when they needed, to, they lacked the talents and the native data. So debtors within the outdated days who might have been salvaged as a substitute misplaced their houses. And buyers misplaced too, for the reason that recoveries from these foreclosures wound up being a lot decrease than the fashions assumed, which was at the least partly as a result of quantity of foreclosures being unnecessarily excessive.
A small cadre of attorneys labored to contest foreclosures abuses (and servicer incompetence additionally made issues worse, corresponding to attempting to foreclose on a house that had by no means had a mortgage, or the place the house had burned down however the financial institution was refusing to just accept the insurer’s cost). One of many leaders was Tom Cox in Maine. Our description from a 2017 submit:
These of you who keep in mind the hard-fought battles of the period of predatory foreclosures will recall the identify of Maine lawyer Tom Cox. Over 9 million households misplaced their houses, a lot of whom might have been salvaged by means of mortgage modifications which might have been higher for buyers too.
Cox broke open the truth that servicers, on a mass foundation, weren’t taking the steps required for them to foreclose. And as quickly grew to become evident, what had been depicted as mere paperwork deficiencies truly displays a vastly extra severe authorized downside: that mortgage notes (the borrower promise to pay) typically if not routinely hadn’t been transferred correctly to the securitization belief. A associated downside was that the lien in opposition to the property hadn’t been recorded within the native courthouse however in a mortgage registry known as MERS, and the procedures for altering the MERS file when the be aware and the mortgage lien modified palms had been legally bogus for a set of causes that it could take an excessive amount of area to recount right here…..
In 2012, Cox was one in all 5 winners of the Public Function prize, which because the Portland Press-Herald described it,”acknowledges individuals older than 60 who work towards the general public good and rewards them with $100,000.”
Cox has continued to win many precedent-setting foreclosures protection circumstances in Maine. I’ve embedded his most up-to-date victory, which makes an argument I hadn’t seen earlier than: that the foreclosing servicer had violated evidentiary necessities by together with data from former servicers the place the personnel from the present servicer who appeared in courtroom couldn’t attest as to their validity.
Sadly, issues have modified since 2017. A contemporary e-mail from Cox:
Since vacancies began opening on the Maine Supreme Judicial Court docket in 2020 after my string of wins of choices protecting of house owners facting forclosure, one after the other new justices have been appointed who’re rolling again these protections. Connected is the latest proof of that.
Over the previous 15 years I’ve devoted the rest of my authorized profession to attempting to guard low revenue householders going through foreclosures. I determine the worth of the professional bono companies I’ve supplied in that point effectively exceeds $2 million. On account of the Finch determination mentioned on this report, I’ve stopped taking up any new foreclosures circumstances as a result of I now not really feel that I can guarantee my purchasers that the Maine judicial system will deal with them pretty. It’s unhappy and painful to see how the banks will all the time win.
My work from 2008 by means of 2020 targeted on defending low revenue householders in courtroom, but in addition within the Maine Legislature, by blocking financial institution makes an attempt there to roll again the favorable selections I used to be profitable within the Maine Supreme Judicial Court docket. They may not beat us within the courts they usually couldn’t beat us within the legislature. However they lastly beat us by persuading the Maine governor ( a DINO—Democrat in Title Solely) starting in 2020 to nominate new justices to the courtroom who would do the bidding of the banks. The hooked up report and information article describe how a former financial institution lawyer, appointed to the Maine Supreme Judicial Court docket in 2020, tipped a significant determination to favor the banks by casting the deciding vote in a 4-3 determination to vacate two unanimous 2017 selections which held that, when banks lose foreclosures circumstances, like all different dropping litigants in all different classes of circumstances, they can not later convey new actions to prosecute their defeated claims.
Cox highlighted the important thing, and pointed, paragraphs from a dissenting justice in Finch, which the opposite two justices joined:
[¶53] Not even seven years in the past, in two separate however analytically associated circumstances every determined unanimously, the Court docket held {that a} judgment entered in opposition to a mortgagee in a foreclosures motion barred successive lawsuits looking for the identical aid. See Pushard v. Financial institution of Am., N.A., 2017 ME 230, ¶¶ 4, 35-36, 175 A.3d 103 (the place the judgment within the first continuing was based mostly, partly, on a poor discover of default); Fed. Nat’l Mortg. Ass’n v. Deschaine, 2017 ME 190, ¶¶ 7, 37, 170 A.3d 230 (the place the prior judgment was issued as a sanction for the plaintiff’s failure to adjust to a pretrial procedural order). This conclusion is unremarkable as a result of it treats mortgagees like every other claimant that had already sought aid however was unsuccessful—when a celebration loses its case by means of a closing judgment arising from a failure of proof or another purpose that’s dispositive, that celebration is barred from attempting once more. See U.S. Financial institution, N.A. v. Tannenbaum, 2015 ME 141, ¶¶ 6, 10, 126 A.3d 734. At present, the Court docket retreats from that precept. It doesn’t accomplish that as a result of the legislation emanating from these circumstances has turn out to be antiquated. It doesn’t accomplish that as a result of the legislation has modified. Relatively, the Court docket does so just because it now disagrees with the end result of the circumstances we determined a short while in the past.
*15 [¶54] In my opinion, Pushard and Deschaine stay good and settled legislation. And the results of the Court docket’s holding at the moment go effectively past overruling most or all of these two 2017 circumstances; it calls into query different consequential areas of established foreclosures legislation. Even past that, the Court docket’s willingness to make an abrupt change within the path of the legislation in these circumstances fairly raises questions concerning the extent to which this Court docket is prepared to stick to established precedent usually.
An egregious component of the opposed Finch is that the newly-appointed bank-friendly justice, Catherine Conors, has such an in depth historical past of representing banks, together with on foreclosures issues, that she ought to have recused herself. This case is so blatant that the Committee on Judicial Conduct has really useful a disciplinary motion in opposition to her (see the primary embedded doc beneath). The second doc accommodates articles concerning the attainable sanction, which might be a primary for a Maine Supreme Court docket Justice.
Cox additionally identified that the Finch determination was successfully punitive, since banks had different methods to recoup these losses:
I ought to add right here that there’s a elementary fact which the 4 majority justices on the Maine Supreme Court docket refused to think about of their 4-3 vote within the Finch case. Each time a mortgage proprietor, which has a respectable declare of foreclosures, loses a courtroom foreclosures case, that loss is essentially as a result of negligence of that mortgage proprietor’s mortgage servicer and/or the foreclosures mill lawyer employed by the servicer. That is so as a result of in each respectable foreclosures case the mortgage house owners lawyer has the responsibility to, and certainly has the capability to, be sure that the mortgage proprietor’s proof will meet the entire proof necessities for the weather of a foreclosures declare.
The issue in Finch was a faulty default discover letter. Any competent lawyer for a mortgage mortgage proprietor ought to decide, and certainly is able to figuring out, earlier than swimsuit and earlier than trial whether or not the default letter meets statutory necessities. When the mortgage proprietor loses at trial on account of a faulty default letter (they’re written by the foreclosures mill attorneys about 50% of the time) the mortgage proprietor can sue the foreclosures mill lawyer for negligence. Mortgage house owners lose judicial foreclosures circumstances solely as a result of their attorneys are negligent and lazy within the dealing with of these foreclosures circumstances. Mortgage house owners have an entire treatment once they lose foreclosures circumstances—they will sue their attorneys. There isn’t any want for courts to as a substitute enable mortgage house owners to inflict second lawuits in opposition to householders who wrestle sufficient to search out attorneys even within the first fits.
The Maine courtroom and plenty of in different states simply can not stand the concept perhaps there can be an occasional “free home” for a mortgagor as the value of holding the mortgage house owners, their servicers, and their foreclosures mill attorneys sincere and cautious within the judicial foreclosures course of.
However to return to the dialogue on the prime of the submit, debtors preventing foreclosures weren’t looking for a free home. They needed a mortgage modification. However the servicers had been no set as much as both give or receives a commission for giving them, so that they’d combat the borrower as a substitute.
00 Committee Report back to Maine SJC filed on 2024-10-11
00 2024-11-03 Me. Monitor–Ethics inquiry places Maine Supreme Court docket in uncharted territory-compressed
00 Finch v US Financial institution NA, 2024 ME 2 (Westlaw ed.)
