PORTLAND – A federal judge cleared the way Friday for GMAC Mortgage Co. to resume foreclosure sales and evictions in Maine, which had been on hold for the past month.

But the mortgage giant still faces a class-action lawsuit filed by several Maine homeowners, who allege that GMAC used fraudulent paperwork to illegally speed foreclosure cases through the state’s court system.

The plaintiffs sued in Cumberland County Superior Court in October, and GMAC succeeded in having the lawsuit moved to U.S. District Court in Portland.

Andrea Bopp Stark and Tom Cox, the lawyers for the plaintiffs, say the case hinges on state law so at least part of the case should be sent back to the state court where it was originally filed.

During a hearing on Monday, Stark and Cox asked Judge D. Brock Hornby to freeze all GMAC foreclosure sales and evictions until he makes a decision on the question of jurisdiction.

But Hornby said he would not issue a temporary restraining order against GMAC, primarily because Stark and Cox are likely to lose their bid to have the case remanded to state court.

Hornby was careful to note that his decision was a narrow one and had nothing to do with the crux of the underlying case: whether GMAC should be held liable for alleged fraudulent practices. That question will be addressed as the class action plays out, the judge said.

“I’m not making any ultimate ruling on the merits of the plaintiffs’ claims,” Hornby said.

The next step is for the parties to file briefs on the plaintiffs’ motion for partial remand, and on GMAC’s motion for dismissal of the case. Those briefs are expected to be filed for Hornby’s consideration by the end of this month.

GMAC’s back-office practices came to light through depositions taken earlier this year by lawyers for homeowners in Maine and Florida.

Jeffrey Stephan, a GMAC processor based in Pennsylvania, admitted under oath that he signed more than 10,000 foreclosure documents a month and did not verify the information that those documents asserted, as required by law in Maine and several other states.

That practice by GMAC and other lenders, dubbed “robo-signing,” prompted attorneys general in all 50 states to announce in October that they would investigate the practices of GMAC, JPMorgan Chase, Bank of America and other leading mortgage companies.

It’s unclear how many homes in Maine are in foreclosure proceedings begun by GMAC, the nation’s fourth-largest mortgage lender. According to court documents, the company has initiated 1,156 foreclosure actions in Maine since January 2005, but the documents don’t say how many of those cases remain open, or how many are on the brink of sales.

The class-action lawsuit seeks compensatory and punitive damages for homeowners in Maine who had foreclosures initiated against them by GMAC in the past six years, and whose cases included paperwork that was not processed in compliance with state law.

The plaintiffs also seek a permanent court order to require GMAC to change its practices in foreclosure proceedings in Maine’s courts.

Staff Writer Trevor Maxwell can be contacted at 791-6451 or at:

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