Ruling finds mortgage co. in 'bad faith'
A Maine District Court decision that found that GMAC Mortgage Co. employee Jeffrey Stephan acted in "bad faith" in a home foreclosure case could spur a rise in foreclosure challenges across the country.
In the Sept. 24 ruling, Judge Keith Powers ordered mortgage financier Fannie Mae to cover some of the attorney's fees for defendant Nicolle Bradbury of Denmark, Maine, who's in foreclosure on an $82,000 mortgage, because of GMAC's misconduct as its servicing agent, according to Reuters. Powers said that Stephan acted in bad faith by signing an affidavit related to the foreclosure proceeding without reading it or being in the presence of a notary. In sworn depositions, Stephan has admitted to signing about 10,000 documents a month without reading them in order to speed up foreclosure processes.
Retired attorney Thomas Cox, a volunteer with the Maine Attorneys Saving Homes project working on behalf of Bradbury, told the Maine Public Broadcasting Network the bad faith ruling is unusual and could trigger "hundreds of thousands of cases" filed in other states, which could cause trouble in the title market as homeowners who lost their property due to foreclosure seek a reversal. The Maine case will likely go to trial in Portland in the next three to four months.
Last month, mortgage servicer GMAC halted foreclosure sales and evictions in 23 states in order to review its procedures after questions arose about Stephan and other employees' actions, according to the Wall Street Journal. GMAC is owned by Ally Financial Inc.
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