This website was closely concerned within the battle to cease abusive and unwarranted foreclosures within the wake of the monetary disaster. As we’ll clarify quickly, one of many leaders on this battle, 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 Courtroom determination that overturned precedents to permit banks to relitigate claims they’d misplaced towards mortgage debtors….which is barred for every other kind of authorized motion.
Foreclosures peaked in 2009 and 2010 in vital measure attributable to 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 reasonably excessive proportion of the funds due over time. The financial institution was usually higher served by getting half a loaf relatively 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 information. So debtors within the previous 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 very least partially because of the quantity of foreclosures being unnecessarily excessive.
A small cadre of attorneys labored to contest foreclosures abuses (and servicer incompetence additionally made issues worse, equivalent to making an attempt 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 put up:
These of you who bear in mind the hard-fought battles of the period of predatory foreclosures will recall the title of Maine lawyer Tom Cox. Over 9 million households misplaced their houses, lots of whom might have been salvaged by 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 turned evident, what had been depicted as mere paperwork deficiencies really displays a vastly extra severe authorized drawback: that mortgage notes (the borrower promise to pay) usually if not routinely hadn’t been transferred correctly to the securitization belief. A associated drawback was that the lien towards 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 report when the word and the mortgage lien modified arms had been legally bogus for a set of causes that it will 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 folks 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 instances 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 Courtroom in 2020 after my string of wins of selections 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 making an attempt to guard low earnings householders dealing with foreclosures. I determine the worth of the professional bono companies I’ve offered in that point nicely exceeds $2 million. On account of the Finch determination mentioned on this report, I’ve stopped taking over any new foreclosures instances 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 at all times win.
My work from 2008 by 2020 targeted on defending low earnings 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 successful within the Maine Supreme Judicial Courtroom. 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 Courtroom in 2020, tipped a serious 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 instances, like all different shedding litigants in all different classes of instances, they can’t later carry 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 instances every determined unanimously, the Courtroom held {that a} judgment entered towards a mortgagee in a foreclosures motion barred successive lawsuits in search of the identical reduction. 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 primarily based, partially, 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 reduction however was unsuccessful—when a celebration loses its case by a last judgment arising from a failure of proof or another purpose that’s dispositive, that occasion is barred from making an attempt once more. See U.S. Financial institution, N.A. v. Tannenbaum, 2015 ME 141, ¶¶ 6, 10, 126 A.3d 734. At this time, the Courtroom retreats from that precept. It doesn’t achieve this as a result of the legislation emanating from these instances has develop into antiquated. It doesn’t achieve this as a result of the legislation has modified. Fairly, the Courtroom does so just because it now disagrees with the result of the instances we determined a short while in the past.
*15 [¶54] For my part, Pushard and Deschaine stay good and settled legislation. And the results of the Courtroom’s holding as we speak go nicely past overruling most or all of these two 2017 instances; it calls into query different consequential areas of established foreclosures legislation. Even past that, the Courtroom’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 Courtroom is keen to stick to established precedent usually.
An egregious factor 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 towards her (see the primary embedded doc under). The second doc comprises articles concerning the potential sanction, which might be a primary for a Maine Supreme Courtroom 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 basic reality which the 4 majority justices on the Maine Supreme Courtroom refused to think about of their 4-3 vote within the Finch case. Every time a mortgage proprietor, which has a professional declare of foreclosures, loses a courtroom foreclosures case, that loss is essentially because of the 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 professional foreclosures case the mortgage house owners lawyer has the responsibility to, and certainly has the capability to, make sure that the mortgage proprietor’s proof will meet all the 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 attributable to 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 instances solely as a result of their attorneys are negligent and lazy within the dealing with of these foreclosures instances. Mortgage house owners have a whole treatment after they lose foreclosures instances—they’ll sue their attorneys. There is no such thing as a want for courts to as a substitute enable mortgage house owners to inflict second lawuits towards householders who battle sufficient to seek out attorneys even within the first fits.
The Maine courtroom and plenty of in different states simply can not stand the concept possibly there can be an occasional “free home” for a mortgagor as the value of retaining 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 put up, debtors preventing foreclosures weren’t in search of 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, in order that they’d battle 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 Courtroom in uncharted territory-compressed
00 Finch v US Financial institution NA, 2024 ME 2 (Westlaw ed.)
