Maine’s Supreme Judicial Court has overturned a foreclosure brought by HSBC against a local homeowner, citing affidavits submitted by the bank as “inherently untrustworthy.” In vacating an earlier decision, the court declared that HSBC’s records “are not of the quality that would be admissible at trial.”
According to HSBC, the homeowners, Dana and Robin Murphy, stopped making payments on a $149,000 loan, and the bank initiated foreclosure proceedings. However, the Murphys raised questions about HSBC’s documents, saying that there were “numerous errors that primarily concern HSBC’s evidence of its ownership of the note and the mortgage” on the property. As reported by The Wall Street Journal:
A trial court had initially ruled that HSBC failed to demonstrate standing to foreclose and that it improperly notified the Murphys about the foreclosure. HSBC then filed a new affidavit, and the trial court blessed the foreclosure.
But the Murphys appealed and spotlighted “serious irregularities” in those affidavits that, the Supreme Court said, made them “inherently untrustworthy.” For example, the initial affidavit in the case was dated and notarized on Sept. 10, 2008, even though it included the balance and late fees as of Jan. 29, 2009–or for four months that hadn’t yet happened.
The court said it didn’t have enough information to conclude that a fraud had been committed on the court, as the Murphys had implied, but it did rule that the loan paperwork submitted in the cases was unsatisfactory. It returned the case back to the trial court and HSBC won’t be able to foreclose until the issues raised on the appeal are addressed.
Thomas Cox, an attorney for the Murphys, told the Journal that the case shows the lack of quality in documenting foreclosures, and “that quality has been singularly absent in Maine and throughout the country.” Cox, who also worked on an earlier case that highlighted the use of “robo-signers” in foreclosures, says that this one “has the potential to have a really significant impact” on the ability of banks to foreclose if their documentation isn’t considered reliable.