Maine 'Supremes' Kibosh F'closure Based On Crappy Paperwork; Instruct Trial Judge To Consider Clipping Banksters For Sanctions, Homeowner's Legal Fees

The Wall Street Journal reports:

• The Maine Supreme Judicial Court overturned the foreclosure of a Maine homeowner after concluding that the supporting documentation filed by the foreclosing bank was “inherently untrustworthy.”
• The decision, handed down Friday, underscores the potential for more delays in foreclosures as banks are unable to foreclose on borrowers after being challenged in court for using questionable paperwork.
• The issues raised in the case are separate from the robo-signing scandal that first erupted last fall, where bank employees were accused of signing paperwork without reviewing their contents. Instead, Dana and Robin Murphy challenged irregularities in the foreclosure documents that suggested potential fabrications or other shortcuts.

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• The case turned on several affidavits filed by HSBC Mortgage Services Inc. that were designed to establish the facts of the case. The court ruled that affidavits used by HSBC were not “of a quality that would be admissible at trial.”
• A trial court had initially ruled that HSBC failed to demonstrate standing to foreclose and that it improperly notified the Murphys about the foreclosure. HSBC then filed a new affidavit, and the trial court blessed the foreclosure.

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• The court said it didn’t have enough information to conclude that a fraud had been committed on the court, as the Murphys had implied, but it did rule that the loan paperwork submitted in the cases was unsatisfactory. It returned the case back to the trial court and HSBC won’t be able to foreclose until the issues raised on the appeal are addressed.
• “It is a really clear statement by the Maine Supreme Court about the quality” of foreclosure affidavits “that is going to be required,” said Thomas Cox, one of their attorneys. “That quality has been singularly absent in Maine and throughout the country.”

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• Cox says the ruling is also noteworthy because the Maine Supreme Court appeared to tell the borrowers to seek sanctions, including the payment of legal expenses. “They’re telling us to pursue those motions. It’s the first time I’ve seen a high court do so,” says Cox.(1)

For the story, see Maine High Court Overturns Foreclosure, Cites ‘Untrustworthy’ Paperwork.

For the ruling, see HSBC Mortgage Services, Inc. v. Dana S. Murphy, et al., 2011 ME 59 (May 19, 2011).

(1) The Maine Supreme Court said:

• On remand, the court should determine, pursuant to either or both M.R. Civ. P. 11(a) and 56(g), whether to award the Murphys their expenses, including reasonable attorney fees, incurred defending against HSBC’s two motions for summary judgment before the court and on appeal.