PORTLAND – The plaintiffs in a class-action lawsuit against GMAC Mortgage Co. are seeking a court order to freeze foreclosure sales and evictions of homeowners in Maine whose loans are owned or serviced by the mortgage giant.

A hearing on the request could be scheduled as early as this week in U.S. District Court, where the case has been assigned to Judge D. Brock Hornby.

Lawyers for the plaintiffs say their clients — and potentially hundreds of others in similar circumstances — deserve to stay in their homes as the courts sort through allegations that GMAC has used fraudulent paperwork to speed foreclosures through Maine’s court system.

Revelations about GMAC’s back-office practices came to light through depositions taken earlier this year by lawyers for homeowners in Maine and Florida. That prompted attorneys general in all 50 states to announce last month that they would investigate the practices of GMAC, JPChase Morgan, 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.

“Those situations are the most urgent,” said Tom Cox, a lawyer in South Portland whose work on behalf of homeowners helped prompt the national probe. “We don’t know how many of these cases are out there because we don’t have access to GMAC’s records.”

Cox is one of six lawyers who brought the class-action lawsuit against GMAC last month, on behalf of six plaintiffs who hope eventually to represent a much larger class. The plaintiffs are Michael Holmes, Steven Archibald of Windham, Nicolle Bradbury of Denmark, Thomas True of Belfast, Shawn Morrissette of Saco and Joseph Phillips of Mechanic Falls.

Originally filed in Cumberland County Superior Court, the case was transferred last week to federal court at the request of GMAC.

Jim Olecki, a spokesman for GMAC’s parent company, Ally Financial, said in a prepared statement, “The underlying facts of default in the named plaintiffs’ cases are not in dispute. The average property is not foreclosed on until the mortgage is unpaid for 18 months and all other home preservation options have been exhausted. We will vigorously defend the allegations in the class-action lawsuit.”

The company issued a statement to the media Oct. 12, announcing that it had hired several legal and accounting firms to review its foreclosure procedures in all 50 states.

The plaintiffs in Maine filed their motion for a temporary restraining order last week. Time is of the essence, Cox said, noting that True’s home in Belfast is scheduled to go to auction Thursday.

Like the other plaintiffs, True claims that the legal paperwork used by GMAC to support the foreclosure was signed by Jeffrey Stephan, a GMAC processor in Pennsylvania.

In a deposition for a different Maine foreclosure case, Stephan admitted that he signed more than 10,000 foreclosure documents a month and did not verify the information those documents asserted, as required by Maine law.

That practice by GMAC and other lenders, dubbed “robo-signing,” is a main target of the nationwide investigation. Observers have noted that to process 10,000 documents a month during eight-hour workdays, a person would have about 90 seconds to review each file.

“I do see this case being about making sure servicers and lenders in general, if they are going to bring a foreclosure action, that they do it correctly and according to the rules of our courts,” said Andrea Bopp Stark of the Molleur Law Office in Biddeford.

Stark and Charles Delbaum of the National Consumer Law Center in Boston are the lead lawyers for the plaintiffs.

Stark said the first issue is the request for the temporary restraining order. A telephone conference between the parties and U.S. Magistrate Judge John Rich is set for this morning, and Stark hopes a hearing on the request will be set up as soon as possible in front of Judge Hornby.

“Basically, we’re asking the court to stay all sales and evictions until we can get resolution on the merits of the case,” Stark said.

That could take months or even years.

The next step would be an extensive discovery period, during which the sides would take depositions and gather information. Then the plaintiffs would need Hornby to certify the case as a class action, and to define the class — the pool of people who would be allowed to seek damages.

In their complaint, the lawyers for the plaintiffs say the class should be defined as any homeowner in Maine who had a foreclosure initiated against them by GMAC in the past six years, and whose case included paperwork that was not processed in compliance with state law.

“We’re essentially asking for the money the former homeowners were charged by GMAC to bring the foreclosure action against them. That cost always gets passed on to the homeowner,” Stark said.

“Plus, we’re asking for any punitive damages that the court sees fit.”

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

“What we’re doing in Maine is part of the national pattern of trying to make sure that the past improper practices are not continued,” Cox said.

 

Staff Writer Trevor Maxwell can be contacted at 791-6451 or at: tmaxwell@pressherald.com

 

Copy the Story Link