Livinglies's Weblog

By J. Guggenhiem

The Vermont Supreme Court ruled that filing and then failing to pursue a foreclosure three times is an abusive practice, although it doesn’t preclude the same bank trying a to foreclose a fourth time.  This illustrates a servicer’s attempts to circumvent foreclosure law, failure to produce the note, failure to notify, and the typical games played by servicers who can’t demonstrate standing.

It is unconscionable that a debt-collector be given an infinite amount of opportunities to foreclose and that statute of limitations have been overturned in most states regarding mortgages.

Imagine if credit card companies eventually demand the same options as mortgage servicers do.

The Vermont Supreme Court reversed a Rutland civil court judge’s dismissal of Provident Funding Associates’ foreclosure claim against a Clarendon, Vermont couple and a second mortgage-holder.  The Campney’s took out a $310k mortgage through Provident in 2007.

In October 2008, a year and a half into the mortgage, Provident brought the first of four foreclosure actions, naming both the mortgagees and Joan Campney, an inferior lien holder, as defendants. Provident dropped the foreclosure the following January.

Seven months later, Provident filed for a default judgement to foreclose.  The court dismissed that motion in January 2010 because Provident did not respond to a court order to produce a mortgage note.

Provident filed its third foreclosure action in December 2010, but failed to served the defendants with a copy of the complaint, according to the decision.

The court notified Provident of this oversight in June 2011 but Provident did not respond so the court dismissed the claim that August.

Provident filed a fourth claim in January 2012,  and defendant and junior lien holder Joan Campney moved to have it dismissed, arguing the previous three dismissals “operated as an adjudication on the merits … and barred further litigation of the same claims.”

The trial court ruled that Campney had incurred significant expense and inconvenience in having to hire a lawyer three different times to defend her interest in foreclosure cases in which Provident was unready to proceed, and that it was “equitable” to dismiss the fourth case.

However, the Vermont Supreme Court ruled that while Provident’s conduct was egregious, the lower-court decision was an overreach.

“The power to impose dismissal as a sanction must be exercised sparingly,” the decision read. “The trial court was justifiably frustrated with (Provident’s) litigation behavior. … However, the record here does not show that ( Joan Campney) would be prejudiced by sanctions short of dismissal.”

The Supreme Court also said the trial court had given Campney a “windfall” by effectively giving her mortgage on the property priority over Provident’s, a status she had relinquished in the 2007 agreement.

“This remedy was disproportionate to the harm suffered,” the justices wrote. “We emphasize that we do not intend to excuse (Provident’s) delays and failures to respond to court orders. … The trial court was within its discretion in deciding to impose some form of sanction.”

The Supreme Court wrote that a monetary sanction, such as attorney’s fees, would be more appropriate.  The ruling did not address if Provident had ever produced a note, assignments or could produce a proper chain of title.

Filing multiple foreclosures over years and years is meant to wear down and financially exhaust the homeowners, as is switching servicers, hiding behind Fannie Mae or Freddie Mac,  or claiming to be servicing the loan on behalf of a non-existent trust.

https://law.justia.com/cases/vermont/supreme-court/2017/2016-003.html