Auburn couple’s fight for their home draws attention to home loan problem

Posted June 02, 2011, at 5:46 a.m.
Last modified June 02, 2011, at 8:56 a.m.

AUBURN, Maine — An Auburn couple’s fight to keep their house is drawing the attention of lawyers and banks nationwide.

The reason is a recent decision by Maine’s highest court that questions how banks record their home loans.

In 2005, Dana and Robin Murphy of Auburn bought their Whitney Street house with a $149,000 loan, according to court records.

The next year, they missed a payment and ignited a five-year ordeal.

Their original lender, Calusa, went out of business. Another lender, HSBC Mortgage Services Inc., argues that it owns the property’s promissory note and wants to foreclose.

But the Maine Supreme Judicial Court has upheld an appeal by the Murphys’ lawyers. In a May 19 decision, the high court said it couldn’t rely on affidavits used by HSBC to prove ownership of the property.

“In this case, the affidavits submitted by HSBC contain serious irregularities that make them inherently untrustworthy,” according to the court’s decision.

Among the problems highlighted was a case in which it appeared that a document was signed and notarized at a date before the events described within it.

The Murphys’ lawyers argued that fraud was committed.

The high court said there was not enough evidence presented to show fraud. However, it sent the case back to Dstrict Court where it likely will face another fight and a larger audience.

The case already has been written about in the Wall Street Journal and is featured on a number of Internet sites that track foreclosure law.

A spokesman for HSBC declined comment, citing the ongoing litigation. The Murphys also have declined to comment.

However, Lisbon lawyer Jack Clifford, who is working for the Murphys, said he believes the court’s decision could have widespread implications for how banks must prove their actions.

Signing affidavits that cite their own paperwork — something rules of evidence allow — may not be good enough anymore, Clifford said.

“The reason that it has nationwide implications is that it is now a very well-respected court that is saying to a lower court, ‘We want you to conduct a hearing to determine whether or not a fraud’s been committed,’” Clifford said.

It appears that many documents were signed by bank officials and their contents were filled in later, Clifford said.

“They’ve created the rule of the banks instead of the rule of the law,” he said. “And they went merrily on their way doing this stuff until they got caught.”

The Murphys continue to live in the house, though they have made no payments to HSBC pending the end of the court fight. Until the courts decide who owns the note on the house, Clifford is advising them against it, he said.

He knows of another local foreclosure case in which neither the mortgage nor the note can be found, he said. But many foreclosure cases avoid such complexity, he said.

“They are invariably from our local banks,” he said. “Maine banks don’t act this way. God knows, credit unions don’t.”

See more news from the Sun Journal at http://www.sunjournal.com/.

Similar articles:

ADVERTISEMENT | Grow your business
ADVERTISEMENT | Grow your business