Friday, December 6, 2013
By Thomas Cox, a Portland attorney
PORTLAND — On Monday, The Portland Press Herald ran a column by Peter Judkins, the CEO of Franklin Savings Bank, praising the recent veto of L.D. 145 by Gov. LePage (Another View, "Editorial wrong on foreclosure bill's consumer protection"). This bill was designed to protect Maine homeowners from abusive mortgage servicers, and the governor's veto of it was unfortunate.
ABOUT THE AUTHOR
Thomas Cox, a Portland attorney, is the co-counsel in a class action lawsuit against GMAC Mortgage Co. alleging that GMAC used fraudulent paperwork to illegally expedite foreclosure cases.
A Maine Supreme Judicial Court decision issued in December described some of the foreclosure practices of one large national mortgage servicer as being "reprehensible," "fraudulent" and "ethically indefensible." L.D. 145 was designed to combat some of those abuses by giving Maine homeowners the right to demand that a foreclosing bank produce the original mortgage note for inspection early in the foreclosure process.
In representing Maine homeowners in foreclosure, I far too often see foreclosure cases brought where the foreclosing parties either do not have the note, or do not have the endorsements on the note that would give them the legal right to foreclose. No one would expect a bank to cash a photocopy of a check, so why should Maine homeowners be forced to trust these national servicers when all that they produce is a photocopy of a mortgage note?
Mr. Judkins asserts that L.D. 145 is duplicative of 2009 legislation, which enacted a law requiring foreclosure plaintiffs to prove ownership of a mortgage notes when they begin a foreclosure case.
He ignores the fact that the national servicers violate that law routinely, and then bitterly complain when court decisions expose their violations. L.D. 145 would have stopped them from violating Maine law and destroying people's lives. These servicers have learned that Maine's underfunded court system allows them to get away with these violations.
Mr. Judkins' assertion that L.D. 145 was duplicative and unnecessary is simply wrong. More disturbing is Mr. Judkins' assertion that L.D. 145 would have delayed foreclosures.
That statement is worse than wrong -- it is not honest. LD 145 would not have delayed any legitimate foreclosure by a party in possession of the original note as Maine law requires.
Bank regulators, as well as Fannie Mae and Freddie Mac, require that banks provide mortgage servicers with the original notes before those servicers begin foreclosures. If the servicers comply with these rules by having the original notes in their possession before they begin foreclosures, no foreclosure will be delayed should inspection of that note be requested during the case.
Furthermore, nothing in L.D. 145 would have given any party, or even a Maine court, any right or power to delay a foreclosure while the note inspection process contemplated by L.D. 145 was proceeding.
The Maine homeowners who are being victimized by the national mortgage servicers all do their banking at local Maine banks and credit unions. The Maine banks deprived these Maine homeowners of the simple protection against the abuses that L.D. 145 would have provided.
Could their opposition arise out of the fact that Bank of America is a member of the Maine Bankers Association, and is the second-largest mortgage servicer in the country and one of the biggest violators of Maine's rule requiring proof of ownership of the note?
Tellingly, the Maine Credit Union League worked with us to develop L.D. 145 into a bill that would have been effective in helping Maine homeowners while imposing the least possible burden on Maine financial institutions.
The league saw the need for the homeowner protections that we were seeking and threw its full support behind L.D. 145. It worked hard in the Legislature to try to counteract the disinformation about the bill being put out by the Maine Bankers Association and its army of lobbyists, only to see its good efforts undone by our governor, who was also misled by the bankers' false assertion that L.D. 145 would have delayed foreclosures.
Maine's credit unions demonstrated yet again that they truly care about Maine's citizens, while the Maine Bankers Association has shown that it apparently does not.
– Special to the Press Herald