The landmark legal case that last year led to a temporary freeze on foreclosures across the nation reached its conclusion Tuesday morning when the Maine Supreme Judicial Court upheld a lower court ruling.

By a 5-1 margin, the court declined to explore the issue of contempt and additional sanctions against mortgage servicer GMAC and the Federal National Mortgage Association, known as Fannie Mae.

The case centered around an attempt to evict a Denmark woman. Nicolle M. Bradbury bought a home in 2003 for $75,000 but after losing her job several years later became unable to pay the monthly mortgage bill of $474.

The loan was modified once before going into default. Foreclosure proceedings reached a snag when attorney Thomas A. Cox, representing Bradbury for free through Pine Tree Legal Assistance, was able to depose a GMAC employee and reveal a high-volume and careless approach to the review and signing of documents necessary to foreclosing on a homeowner’s house.

The term robo-signing caught on instantly and turned out to be prevalent throughout the industry, leading to temporary foreclosure freezes not only by GMAC but also by larger lenders Bank of America and J.P. Morgan Chase.

The U.S. Senate held hearings. State attorneys general became involved.


Back in Denmark, Bradbury tried to catch up on her mortgage, but the bank refused her money, Cox said.

“Basically, the foreclosure statute says that once a bank declares a default and starts a foreclosure, if they accept payments thereafter, they waive the default,” Cox said. “So at that point, she didn’t try to make any more payments.”

Last September, the case was decided in Bridgton District Court with the bank dismissing its foreclosure case in order to get proper documentation in order and Judge Keith Powers ordering the bank to pay Bradbury’s attorneys nearly $24,000 for submitting a bad faith affidavit for purposes of summary judgement, the legally agreed upon facts.

Powers also denied the bank’s attempt to prevent Cox’s deposition of limiting signing officer Jeffrey Stephan from becoming public.

Powers stopped short of finding the bank in contempt, however, a possibility allowed by the same Maine Rule of Civil Procedure 56(g) that led to the monetary sanction.

In the majority opinion issued Tuesday, Justice Ellen Gorman of the Supreme Court noted that no state or federal court had ever issued a finding of contempt on the basis of bad faith affidavits.


Gorman wrote, “Against this backdrop of precedent, and given our highly deferential standard of review, we cannot say that the trial court abused its discretion in declining to be the first court in the nation to employ Rule 56(g) contempt sanctions.”

GMAC, largely owned by the US Treasury after a $17 billion federal bailout in 2008, is now a subsidiary of Ally Financial Inc. In a written statement, Ally spokeswoman Gina Proia said that “GMAC Mortgage is pleased with the court’s ruling.”

When asked about GMAC re-starting foreclosure proceedings against Bradbury, Prioa said, “We cannot comment on the details related to a specific borrower’s case.”

Cox continues to pursue a class-action case against GMAC. He expressed disappointment in Tuesday’s decision, particularly after reading Gorman’s harsh words for the bank’s “reprehensible practice” of “fraudulent evidentiary filings” that the court found “ethically indefensible.”

“I think the level of criticism of the misconduct was good to see,” Cox said. “I was gratified to see them recognize the severity of it, but disappointed to see the lack of remedy for it.”

Justice Jon Levy wrote a dissenting opinion, noting that a Florida court had sanctioned GMAC in 2006 for “engaging in the very same practices” and concluding that “the court should have conducted a hearing before it determined that a finding of contempt was not warranted.”

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