September 23, 2010

Maine lawyers help uncover mishandled foreclosures

Now they're trying to get a summary judgment in a GMAC case nullified to keep a Denmark woman in her home.

By Tux Turkel tturkel@pressherald.com
Staff Writer

Two Maine lawyers who help homeowners fight foreclosures may have contributed to a decision this week by one of the nation's largest mortgage-servicing companies to stop foreclosing on homes in 23 states, including Maine.

Thomas Cox of South Portland and Geoffrey Lewis of Fryeburg said Wednesday that the shoddy legal practices that led to the temporary halt appear to be common in an industry that is swamped by troubled loans.

GMAC Mortgage Co. announced this week that it had suspended foreclosures after discovering that employees had signed thousands of documents tied to foreclosures that contained information they didn't personally verify, as required by law. The company said it's reviewing the documents.

The decision followed revelations that a foreclosure processor in Pennsylvania, Jeffrey Stephan, had signed more than 10,000 foreclosure documents a month, without reviewing all of the information.

GMAC's action has led the state of Florida to look into whether improper documentation may have sped up foreclosures there.

In Maine, the Attorney General's Office declined to say whether it's investigating at this point. Linda Conti, an assistant attorney general, said Wednesday that any probe would likely involve determining whether mortgage holders were treated unfairly during the foreclosure process.

Cox and Lewis volunteer with a legal defense group called Maine Attorneys Saving Homes. About 6,000 foreclosures a year have been filed recently in Maine, and the advocacy group estimates that only one in 10 homeowners is represented by a lawyer.

GMAC is a unit of Ally Financial Inc. It services more than 20,000 mortgages in Maine, some for other lenders.

Cox, a retired lawyer, began to notice numerous documents signed by Stephan and got suspicious. He asked Lewis to help him contest a GMAC foreclosure case against a homeowner in Denmark, Nicole Bradbury. That led Cox to go to Pennsylvania in June and question Stephan under oath.

During the questioning, it became clear that Stephan had little training and didn't know what information was in the documents, other than the borrower's name.

He also acknowledged that he didn't have custody of records relating to the mortgage transaction. The records were on a computer, but Stephan said he and his staff didn't check to determine whether information was accurate.

Stephan's admissions were similar to those in sworn testimony taken by a lawyer in Florida in December.

"What blew me away," Cox said Wednesday, "was that Stephan admitted he didn't have custody of the file. It was scanned into a computer and he didn't even look at it. He didn't know if it was a true and accurate copy. He didn't read the affidavits. He just checked the numbers."

Cox and Lewis are now trying to get a judge to throw out the summary judgment -- the legally agreed upon facts -- in Bradbury's case. The lawyers also are seeking damages on behalf of Bradbury, who remains in her home pending court action.

The lawyer representing GMAC in Maine in the case, John Aromando, couldn't be reached for comment Wednesday.

GMAC's decision to put the brakes on foreclosures is prompting a wider examination of the industry's practices nationwide. Some observers have called Stephan and other foreclosure processors "robo-signers," noting that to process 10,000 documents a month during eight-hour workdays, a person would have only 90 seconds to deal with each file.

"I suspect this is an industry practice, given the magnitude of the problem and the process," Lewis said.

If that's true, Cox said, the practice represents an abuse of the justice system, and should make judges look more carefully at the documentation in foreclosure cases.

"This is costing people their homes, if it's not done correctly," he said.

Staff Writer Tux Turkel can be contacted at 791-6462 or at:

tturkel@pressherald.com

 

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