PORTLAND – A federal judge has dismissed two of the three counts against GMAC Mortgage Co. in a class-action lawsuit filed on behalf of several Maine homeowners.

The lawsuit in U.S. District Court alleges that GMAC used fraudulent paperwork to illegally speed foreclosure cases through the state’s court system.

Judge D. Brock Hornby, in a decision filed Wednesday, sided with GMAC as he dismissed one allegation of abuse of process and an allegation of fraud on the court.

That means only one count remains, in which the plaintiffs claim GMAC violated Maine’s Unfair Trade Practices Act and should be liable for damages and injunctive relief.

As similar lawsuits against GMAC and other large mortgage companies play out in state and federal courts nationwide, it was unclear Thursday what impact the ruling in Maine might have elsewhere.

Andrea Bopp Stark, one of the lead attorneys for the Maine homeowners, vowed to press on. She said there’s still a chance that the plaintiffs can get the relief they seek through the remaining count. Stark intends to meet soon with her co-counsel, Tom Cox of Portland, to discuss strategy.

“The case is not dead,” said Stark, of the Molleur Law Office in Biddeford. “It’s disappointing, but it is not determinative of the case as a whole.”

The 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.

A spokesman for GMAC’s parent company, Ally Financial, could not be reached for comment Thursday.

In dismissing the counts of abuse of process and fraud on the court, Hornby essentially ruled that the proper venue for homeowners to challenge their individual foreclosures is state court. He did not make any findings of fact about GMAC’s paperwork practices.

Regardless of GMAC’s process, Hornby ruled, “The remedy is to seek to vacate the (foreclosure) judgment that was obtained, not to start a new lawsuit.

“A contrary ruling would mean that the outcome of every (foreclosure) lawsuit could produce a later lawsuit by the unhappy loser, seeking damages on account of the former lawsuit and claiming that it resulted from false testimony or false affidavits,” Hornby wrote.

GMAC’s back-office practices came to light through depositions taken last year by attorneys 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.

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

[email protected]

 


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