Maine could reconsider foreclosure rule that protects borrowers
Experts say the possibility that Maine could remove consumer protections from continuing foreclosure litigation after a borrower wins could give servicers broad options similar to those in other jurisdictions.
The catalyst for potential change is JP Morgan v. Moultain, a case in which the court system had previously found a lack of evidence related to the mortgage company’s ownership of the loan and the amount owed, according to the Portland Press Herald. The latest escalation in this lawsuit calls for the reconsideration of both a precedent limiting further litigation and a related case that defined it, The Maine Monitor reported.
Both local news outlets noted that Thomas Cox, a high profile consumer advocate who drew attention to the widespread irregularities in the foreclosure process following the Great Recession, opposes changing the precedent, saying it could hurt borrowers as they come under increasing financial pressure from inflation and the higher rates.
Other jurists agree that a change would be a setback for consumers.
“Unfortunately for landlords, most states don’t have such protections,” said Troy Doucet, director and attorney at Doucet Gerling, who called Maine’s precedent “very unusual and very beneficial for landlords.”
A decision in favor of dismissing the precedent would bring Maine’s laws into line with the status quo, as one exists in a patchwork of state foreclosure laws. Some jurisdictions like Florida allow considerable leeway in subsequent actions while others, like Kentucky, set clear limits on when they can occur, Jason Vanslette, real estate partner at Kelley Kronenberg Law, said in a statement. E-mail.
“It wouldn’t be unusual for the Supreme Court of Maine to adopt a more ‘bank-friendly’ interpretation,” Vanslette said.
Given that to date foreclosure activity has remained low, home equity levels are high, and there have been operational improvements in record keeping and compliance, borrowers with newer mortgages may not be as risky today as older loans. of a modification of this rule. But experts warn that the limits of technological advances in service still leave borrowers at some risk of their loan not being processed properly.
“I imagine there are lingering issues around old business books, and while electronic vaulting and digital are where the market is going, [the servicing process] is remarkably paper-heavy to date – with delayed adoption. So I imagine there’s still a challenge there,” Faith Schwartz, president of industry consultancy Housing Finance Strategies, said in an email.