SOUTH BERWICK – There’s a bill wending its way through the legislature that is creating quite a firestorm.

It’s a very simple bill. L.D. 145, sponsored by Rep. Roberta Beavers, D-South Berwick, requires any bank attempting to foreclose on a home in Maine to present the court with the mortgage note. It even gives the foreclosing party 30 days after filing the papers to come up with it.

That’s all it is. A bank has to show the signed note and all its endorsements to the court before taking your home. It reinforces what has been established property law for a millennium — part of old English common law and of our code since our country was founded.

So you’d think the passage of L.D. 145 would be a no-brainer. Not these days. Not now with national banks involved in our state’s real estate market.

Their lobbyists in Augusta are now fighting this bill with every fiber of their being. They are bombarding our legislators with reasons why this bill will destroy our market: how it will harm Maine homeowners; why it will hurt small, local Maine banks; how it will create a huge burden on any bank forced to comply.

Last month, legislators were even told that this bill would create a security risk — signed mortgage notes are valuable and the banks don’t like to take their paperwork out of their buildings. Isn’t the entire point of documentation signed by both parties is that it can be produced in court if a dispute arises?


Moreover, if this paperwork is so valuable, why weren’t the banks more careful in keeping track of it? This reason is simply beyond silly. The rest are intentional misrepresentations.

But they beautifully illustrate the strategy being employed by the big bank lobbyists to stop L.D. 145. They are capitalizing on the public’s lack of familiarity with the mechanics of mortgages, securitization and foreclosure proceedings.

Sure, mortgage finance can be pretty complex. But what’s involved here is basic. Moreover, it will not harm our real estate market, Maine homeowners or local Maine banks. Rather, it will afford us all a degree of protection we don’t have now.

Today, the major banks do not routinely produce a mortgage note at a foreclosure hearing. They are supposed to, but the simple truth is, they can’t find most of the notes.

During the housing frenzy, banks bought, sold and resold so many mortgages to each other and investors around the world that, in many cases, no one is really sure who has any one note now — or who should have it. When a national bank is involved, whether or not it has a right to foreclose on a given property is often an open question.

But a homeowner has to go some very expensive rounds in court to discover the answer. So, when foreclosure notices arrive, many homeowners just give up — even if they have never, to their knowledge, dealt with the bank trying to take their home.


And the story may not end there. Down the road, if another bank should find the note in its vaults, it can pursue the homeowner. L.D. 145 would stop this. It would also protect every homeowner from illegal foreclosure.

Right now, many banks are simply producing affidavits saying they have the right to take a home. There are no penalties being enforced now for failing to produce a mortgage note, or even filing false or forged documentation with the courts. No matter how solvent you are, without L.D. 145, you are vulnerable.

As far as our local Maine banks being hurt, this argument, too, is factually suspect. Few of our Maine banks actually participated in the securitization market to any great degree when it was roaring, so most have their paperwork at hand. It is not the “onerous burden” for them to produce it, like it is for the big banks.

Those that did participate in the market sold mortgages into it and shipped the papers to the new owner, and their liability ended. So, no harm there.

The lobbyists are also saying our banks would be hurt as it would be more difficult to sell Maine mortgages into the securitization market in the future. But, as Fed Chairman Ben Bernanke admitted in his testimony to Congress last month, there is no securitization market for mortgages anymore. From any state. It’s dead! It isn’t coming back.

So here we are. Defeating L.D. 145 benefits no one except the big national banks who have done catastrophic damage to our economy over the past four years. It institutionalizes their right to foreclose on a property with little or no valid documentation.

Passing L.D. 145 protects every Maine homeowner, our market and our local banks. It upholds 1,000 years of established property law. So I have to ask again — and every one of us should ask our legislators — why is there even a question about passing this bill?

– Special to The Press Herald


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