Maine: GMAC Can Sell Foreclosed Homes in Maine After Court Ruling

GMAC Can Sell Foreclosed Homes in Maine After Court Ruling

December 11, 2010, 12:03 AM EST

By David McLaughlin

Dec. 11 (Bloomberg) — GMAC Mortgage LLC, after defeating a bid by homeowners in Maine who sought a federal court order blocking sales and evictions, can sell foreclosed homes in the state.

U.S. District Judge D. Brock Hornby, at a hearing yesterday in Portland, Maine, declined to grant a temporary restraining order that a plaintiff’s lawyer said would have kept GMAC from selling foreclosed homes and evicting residents.

The judge said his decision hinged on the power of federal courts to stop proceedings in state courts, where foreclosures take place. He said individual homeowners who face losing their homes in a foreclosure sale can go to state court to stop the sales, he said.

“This decision is based on the limited authority federal courts have,” Hornby said.

The Maine case, filed in state court in October and moved to federal court by GMAC in November, involves five homeowners who are suing GMAC, claiming the company relied on defective court documents in seizing homes. The plaintiffs are seeking to represent Maine homeowners who are facing foreclosure by GMAC or who lost their homes in a GMAC foreclosure during the past six years and whose case relied on false documents, according to court documents.

GMAC had agreed to suspend foreclosure sales and evictions in the state until the judge ruled on the request for the restraining order, Andrea Bopp Stark, a lawyer for the plaintiffs said. That agreement expires yesterday.

May Join Suit

Maine Attorney General Janet Mills is considering joining the GMAC lawsuit, Assistant Attorney General Linda Conti said in an interview yesterday. The office is also considering filing its own lawsuit against GMAC, she said.

“I have concerns about the integrity of the state court process,” said Conti, who attended yesterday’s hearing. “The attorney general will have to decide whether this matter is so important to the public interest that we should file our own proceeding.”

GMAC owned by Detroit-based Ally Financial Inc., was sued by Ohio Attorney General Richard Cordray, who is accusing the company of fraud for submitting false documents in foreclosure cases in the state, according to the complaint. The attorney general’s office said it’s seeking a court order to block GMAC from proceeding to foreclosure in any pending case in Ohio or selling foreclosed properties in which a false affidavit was submitted.

No Fraud, Deceit

GMAC said in a statement that there was “nothing fraudulent or deceitful” about its foreclosure practices and that it would be “fully vindicated.”

Attorneys general in all 50 U.S. states are investigating whether mortgage servicers relied on false documents and signatures to justify foreclosures. The probe, announced in October, came after banks said they were suspending repossession efforts to review foreclosure procedures. GMAC said in September that it was suspending foreclosure sales in 23 states.

GMAC is the fifth-largest residential mortgage servicer in the U.S., servicing 2.4 million loans, Tom Marano, chief executive officer for mortgage operations at Ally, told a congressional committee last month in prepared remarks. Marano said GMAC’s process for preparing foreclosure affidavits was “flawed” and that it was reviewing foreclosures and submitting new paperwork when necessary.

Company Statement

“GMAC Mortgage remains confident about its ability to proceed with foreclosure sales and evictions in cases where all of the relevant factual information supporting foreclosure has been confirmed,” Gina Proia, GMAC spokeswoman, said in a statement. Yesterday’s court ruling was consistent with that approach, she said.

The homeowners in the Maine lawsuit are relying on the deposition of a GMAC employee, Jeffrey Stephan, who said under oath in June that he signed 8,000 foreclosure documents a month, according to court papers. Stephan signed papers in Maine foreclosures without personal knowledge of the cases, lawyers for the homeowners said.

“This system does not work if GMAC commits abuses and fraud,” Stark told Hornby during arguments yesterday. “GMAC has repeatedly abused this process by presenting fraudulent representations to courts around the state.”

Two of the homeowners in the Maine case are facing foreclosure and remain in their homes, Stark said in an interview. GMAC won foreclosure judgments against the other three plaintiffs, and one of those, Michael Holmes, is still in his home in Belfast, Stark said.

Suits Nationwide

The Maine case against GMAC is one of at least two dozen potential class-action lawsuits across the U.S. against banks and mortgage-services companies over their foreclosure and loan- modification practices. Banks facing lawsuits include Bank of America Corp., Wells Fargo & Co., and JPMorgan Chase & Co.

GMAC said in a Nov. 4 court filing that the Maine plaintiffs, if allowed to proceed as a class, could seek more than $2 billion in damages and attorney fees. Since Jan. 1, 2005, it has filed 1,156 foreclosure actions in the state on mortgages that it serviced, according to the filing.

The plaintiffs in the Maine case hope to move their bid to stop foreclosure sales and evictions back to state court, where the lawsuit was first filed, because federal courts can’t interfere with state court proceedings, Stark said in an interview. She argued during the hearing that Hornby could issue a temporary restraining order pending a decision on moving part of the case to state court.

Federal Court

Hornby said the plaintiffs’ chances of moving part of the case out of federal court are “very, very slim,” which he said was the most important of his reasons for not granting the restraining order.

Thomas Cox, a lawyer for the plaintiffs, said after the hearing that GMAC took advantage of federal legal procedures to move the case to federal court in a move to block a temporary restraining order “and deprive these plaintiffs of an opportunity to have their claims considered on the merits.”

The case is Bradbury v. GMAC Mortgage LLC, 10-00458, U.S. District Court, District of Maine (Portland).

–With assistance from Margaret Cronin Fisk in Southfield, Michigan. Editors: Andrew Dunn, Charles Carter.

To contact the reporter on this story: David McLaughlin in Portland, Maine, at

To contact the editor responsible for this story: David E. Rovella at

7 Responses

  1. this is BULLSHIT! More jurisdictional posturing , it should have been remanded back to state & GMAC sanctioned !
    Just more proof of the rigged judicial outcome, this judge as the GMAC lawyer should soon begin to fear these actions.
    cornered people = desperate measures for those abused. why am I ANGRY??..hmmm

    “Yes, we must, indeed, all hang together, or most assuredly we shall all hang separately.”- Benjamin Franklin.

    “It is better to die on your feet, than to live on your knees.” Emiliano Zapata

  2. Foreclosure needs to be addressed in state courts, because the state has the most authority regarding same.

  3. John, the federal judge refused to remand this case when it was removed even though there was no “claimed” diversity and it was an in rem action. Monday, I had a tro hearing in State Court. I had sued the trustee in state court along with common law claims. I moved for a tro because the defendants were “sort of” threatening foreclosure while I was in chicago on vacation. The judge in state court said in open court–I don’t know why Judge Kay did not remand this to state court–he ALWAYS remands cases like this to state court. I recited that statement of Judge Mesle to the federal judge in the Motion for Reconsideration of My Motion for remand along with the Maine and Arizona cases. Judge Mesle believes she needs the quiet title action before her and also believes the threat needs to be a little more imminent. She left open the door as to whether she would grant a tro if the defendants tried to movve for one and the trustee filed something at the courthouse. Based upon her ruling I filed a new Motion for Remand cited her concerns and citing the two cases. BOA/BAC’s lawyers contended to me when they removed the matter that their client did not want to be in state court, although he would not say why. I think they have always felt that a tro cannot be granted in fed court but they could not figure out a way to remove it. Then they used a settlement letter I sent to them as the grounds for removal claiming they did not get it until after 30 day removal period had expired. IN my motion for remand I attached a certified receipt showing they had received it prior t othe 30 day expiration period for filing a removal and that they lied to the court about not havin it–despite that the fed judge granted the removal. After the removal I moved to dismiss the state law claims and amend the quiet title to add a declaratory judgment action leaving only an in rem action in federal court which I believed had to be remanded. The defendant MERS agreed with me that the Second Amended Complaint in fed court that i had filed should be granted and that the dimissals of the state claims should be granted. Despite that, there had been no ruling one way or another on the Proposed Second Amended Complaint. This was the first time that MERS had opposed anything that BOA/BAC had done in this case. Within the last week the Arizona and Maine cases came down which I believe are the rirst reportedcases saying that quiet title actions in these forecvlosure matters must be decided in state court and tro’s are not appropriate in federal court on foreclosures. With the comments of Judge Mesle and reciting to both the Arizona and Maine cases I moved fo remand this morning, providing courtesy copies to the Federal Judge in Chambers indicating an immediate need to review as well as serving a courtesy copy on the State juge. I think it will be very important to find out what BOA/BAC’s position is in a written brief as to whether they believe a TRO can or cannot be filed in TRO to stop foeclosures. If they say it cannot, then every case they have removed to federal court should be remanded to state court IMMEDIATELY so that a state court judge can rule on a TRO if necessary.

  4. Go get em Gwen !!!!!!!!!

  5. sounds to me as though the Fed judge moved it back to state court, not allow any action…or am i wrong?

  6. The refusal of a federal judge to enter a tro to stop foreclosure is another reason that should be cited by individuals who are opposing motions to remove their claims to federal court. The Bradbury decision along with a recent decision in Arizona from a Federal Magistrate clearly set out the limited jurisdiction of the federal courts. My quiet title was removed to federal court and my motion for remand was denied (at the time there was not a case like the Bradbury decision) although I argued this position. Now I am asking for reconsideration of remand based upon the Bradbury decision and the Arizona decision.


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