NOte: This blog post contains an article I wrote for Maine Lawyers Review, published in the MLR July 2009 edition.
M.A.S.H. –Maine’s Foreclosure Defense Force: Part 1
By Peter Clifford
“Sell a man a fish, he eats for a day, teach a man how to fish, you ruin a wonderful business opportunity.” Karl Marx
Lawyers of Maine, unite! We have nothing to lose but our bank-financed chains!
Most Maine attorneys are familiar with “the call:” A desperate potential client is on the line. A foreclosure judgment will likely be entered soon. The client is facing financial ruin.
If you have received such a call, you are not alone. There are an estimated 125 new foreclosure filings each month in Maine courts. Most of these homeowners cannot afford private counsel and are facing the loss of their home, without any legal support.
Can we help? As Sarah Palin would say: (with a wink and a nod ) “You betcha.”
A dynamic new group of volunteer attorneys, known as “Maine Attorneys Saving Homes,” (MASH) is coming to the rescue. Sponsored by the Maine Bar Foundation, the Volunteer Lawyers Project and Pine Tree Legal Assistance, MASH was formed to respond to the current foreclosure crisis.
With apologies to Marx, MASH aims to teach you, the Maine practitioner, how to “fish” [translation: litigate] for “monstrous sharks” [translation: predatory lenders].
In exchange for a commitment to accept just one pro bono foreclosure case per year, MASH provides outstanding free training. MASH’s website can be found at http://vlp.org/resources/mash. Along with the training, MASH has developed strategies to make this area more feasible for practitioners. For example, many applicable statutes, including the Unfair Trade Practices Act, provide attorney’s fees to successful parties.
[Author’s note: I have handled foreclosure defense for many years, but attended a MASH training session in June to keep up with developments in this rapidly changing area of law. I was very impressed with the quality of the presentations.]
A growing number of lawyers and organizations, including the Maine Trial Lawyers Association, are forming partnerships with MASH. You should too. With luck and perseverance, the Maine bar will continue its tradition of leading the nation in the provision of pro bono legal services.
For the next three articles, we’ll briefly review principles explored more fully in the MASH foreclosure defense training. ps. The next training session will be in September.
An overview of the foreclosure process was given by Chet Randall of Pine Tree Legal. Some highlights:
1. The Acceleration Letter. Foreclosures typically start with the “dreaded letter.” The form and content of the acceleration letter is heavily regulated under Freddie Mac guidelines as well as state law. It must be perfect. It is frequently not, giving rise to our first defense. If it’s erroneous, the homeowner should argue that the entire foreclosure is invalid and must be “redone.”
The Maine Legislature just extended the right to cure to 35 days in recently passed legislation. Going forward, this change will surely lead to a period of transition and chaos as right to cure letters and acceleration letters are issued. Additionally, foreclosure mediation will now be required. A defective acceleration letter will help give your clients leverage in any future mediation.
Lenders frequently exclude mandatory language, required by the mortgage, from the acceleration letter. For example, they frequently try to combine the right to cure letter with the acceleration letter. Always look at Paragraph 22 of the standard Freddie Mac mortgage.
When you receive a Complaint, compare Paragraph 22 of the mortgage to the actual language of the acceleration letter. See if they are in agreement. If not, the acceleration is invalid.
2. Faulty Templates. Make sure the boilerplate in the Complaint and the supporting documents are 100% accurate. In light of new federal and state legislation, Courts now recognize that lender sloppiness and predatory behavior is no longer tolerated. The days of judges saying that defects don’t matter, “because the money is owed anyway,” are over. Typos on substantive issues can restart the clock.
Frequently, the loan servicers have poor recordkeeping systems. Sometimes, the proper record custodian cannot be located. The attorney for the lender is not a witness. He or she should not be permitted to provide unsupported assertions to sidestep foundational defects.
3. Affirmative Defenses. There are an infinite number of affirmative defenses. For example, the law of negotiable instruments is extremely complex and exacting. This area of law gives rise to a frequently overlooked affirmative defense: lack of a proper endorsement.
Sometimes a note does not get properly endorsed in accord with the UCC. If it is not a bearor note, than it has to be properly endorsed. In this era of universal assignments and widespread lender bankruptcies, make sure you have access to the original note, with endorsements. The bank can’t foreclose without possession of a properly endorsed note.
4. Right to Bring Action/ Real Party in Interest. Many times there is no clear indication that the “plaintiff” in the case has any actual right to bring the action. The borrower certainly has the right not to pay a fictitious payee, or a scam artist. The lender needs to overcome this particular defense in the pleadings or in the summary judgment motion by affirmatively showing that proper assignments have been made.
PTLA Website Resources. There is now an improved sample Answer on Pine
Tree Legal’s PTLA’s website, ptla.org. There is also a homeowner resource guide at ptla.org. There is a new paragraph in the standard answer. It has a provision in which authenticity is challenged. Next month, we review dirty tricks, er, I mean, tactics. As Michael Jackson would say, “We are the [foreclosure defense] world…so let’s start giving.”