Homeward Residential, Inc. v. Gregor
| Decision Date | 11 August 2015 |
| Docket Number | Docket No. Wal–14–386. |
| Citation | 122 A.3d 947,2015 ME 108 |
| Parties | HOMEWARD RESIDENTIAL, INC. v. Marianne A. GREGOR. |
| Court | Maine Supreme Court |
Thomas A. Cox, Esq. (orally), Portland, for appellant Marianne A. Gregor.
David W. Merritt, Esq., Houser & Allison, APC, Boston, MA, William Fogel, Esq. (orally), Portland, for appellee Homeward Residential, Inc.
L. Scott Gould, Esq., Cape Elizabeth, for amici curiae Jerome N. Frank Legal Services Organization and National Consumer Law Center.
Panel: ALEXANDER, MEAD, GORMAN, JABAR, and HUMPHREY, JJ.
[¶ 1] Marianne A. Gregor appeals from a judgment entered in the District Court (Belfast, R. Murray, J. ) denying Homeward Residential, Inc.'s foreclosure claim.
Gregor contends that the court erred by (1) stating in its judgment that “[t]he parties may relitigate issues discussed herein in a future action,” (2) admitting in evidence a witness's description of a computer printout to support a finding of the amount due on the loan, and (3) finding that Homeward Residential was in possession of the promissory note. We vacate the judgment and remand for an entry of a dismissal without prejudice.
[¶ 2] Viewing the findings and evidence in the light most favorable to the court's judgment, the case history is derived from the judgment and trial record. See Botka v. S.C. Noyes & Co., Inc., 2003 ME 128, ¶ 15, 834 A.2d 947. The history of the transaction is confusing because of the many assignments and transfers of interest and differing uses of terminology, not always well documented, that the various financial services providers elected to engage in subsequent to the original, and apparently standard, promissory note and mortgage transaction.
[¶ 3] In this opinion, we use the term “promissory note” to refer to the document by which the homeowner promises to pay the debt owed, although some sources call this document the “mortgage note.” We use the term “mortgage” to refer to the document memorializing the agreement that certain real property will secure the debt referenced in the promissory note, although some sources call this document the “mortgage agreement” or “mortgage deed.”
A. The Original Transaction and Subsequent Assignments
[¶ 4] On May 31, 2002, Marianne A. Gregor and George J. Wulff2 executed a promissory note in the amount of $80,000 to SUN MORTGAGE—New England, Inc.3 On the same day, Gregor signed a mortgage on property in Knox securing the debt. The mortgage listed Sun Mortgage as the “Lender,” and by it Gregor “mortgage[d], grant[ed] and convey[ed] the [Knox property] to Lender.”4 The mortgage was recorded in the Waldo County Registry of Deeds.
[¶ 5] The record reflects that the mortgage was assigned or transferred at least eight times subsequent to its creation. Only five assignments or transfers of the mortgage were recorded in the Registry of Deeds. The eight assignments or transfers indicated in the available record were as follows:
[¶ 6] Each of the five assignments recorded in the Waldo County Registry of Deeds states that the assignor is assigning all of its interest in the mortgage to the assignee. The nature of those interests, after the unrecorded assignment of the mortgage to Fannie Mae, is unclear. Fannie Mae has not appeared in this proceeding, and the record does not include any documentation from Fannie Mae authorizing any other entity to appear on its behalf as its agent, loan servicer, or in any other capacity.
B. The Default and Subsequent Court Action
[¶ 7] Gregor stopped making payments on the mortgage in June 2009. On November 10, 2010, IXIS sent Gregor a notice of default and right to cure. When Gregor had not cured the default by October 17, 2011, Bank of America, purportedly having been assigned the mortgage by IXIS, filed a complaint for foreclosure. Homeward Residential was later substituted as plaintiff, consistent with the last recorded mortgage assignment.
[¶ 8] In August 2013, after the discovery deadline, Gregor moved for leave to serve requests for admissions upon Homeward Residential. Gregor argued that, during discovery, Homeward Residential produced the Fannie Mae mortgage assignment, which Gregor asserted called into question Homeward Residential's ownership of the mortgage and standing to conduct this foreclosure action. Gregor sought admissions that Fannie Mae is the owner of the promissory note and mortgage and that Homeward Residential sent a copy of the Fannie Mae mortgage assignment to Gregor during discovery. The court (Worth, J. ) granted the motion. In a document dated November 1, 2013, Homeward7 Residential responded to the request for admissions by stating that Fannie Mae “is the owner of the loan evidenced by the note ... and the mortgage ... that are the subject of this lawsuit”; that Homeward Residential “is not the owner of the loan that is the subject of this lawsuit”; and that Homeward Residential sent a copy of the Fannie Mae mortgage assignment to Gregor during discovery.
[¶ 9] On February 11, 2014, the court (R. Murray, J. ) held a bench trial. The sole witness at trial was a loan analyst from Ocwen, which, she testified, is the current servicer of the mortgage. The loan analyst testified that “Ocwen was first a servicer for Homeward [Residential] and then there was a merger between the two,” and “Ocwen kind of consumed Homeward [Residential].” The precise nature of the relationship between Ocwen and Homeward Residential remained unclear throughout the hearing. At times, the loan analyst and Homeward Residential's counsel identified both Ocwen and Homeward Residential as being “the plaintiff” in the action.
[¶ 10] At trial, the court admitted in evidence, among other exhibits, a copy of the original promissory note;8 a copy of the original mortgage; the series of recorded mortgage assignments; the unrecorded mortgage assignment from RBMG to Fannie Mae; an Ocwen computer printout purporting to show the amount due on the loan; and a copy of Homeward Residential's responses to Gregor's requests for admissions.
[¶ 11] On August 20, 2014, the court entered judgment for Gregor but, in its order, made factual findings, including a finding that Gregor owes a total of $119,302.51 on the note. The court also found that Homeward Residential was entitled to enforce the promissory note because its counsel possessed the original note at trial and the note was indorsed in blank. The court determined, however, that Homeward Residential had not established that it had standing to foreclose on the mortgage, citing Bank of America, N.A. v. Greenleaf, 2014 ME 89, 96 A.3d 700, due to the prior assignment of the mortgage to Fannie Mae.
[¶ 12] In its judgment, the court stated that it was “reserving the right for both parties to relitigate the issues discussed herein so that this action does not act as a bar to future action.” The entry of the judgment read: “Judgment for Defendant.
The parties may relitigate issues discussed herein in a future action.” Gregor brought this timely appeal. See 14 M.R.S. § 1901 (2014) ; M.R.App. P. 2.
[¶ 13] “We've lost our way in these foreclosure cases.” Homeward Residential's counsel expressed this opinion at oral argument. Indeed, the way has been lost, but not through fault of the courts. The financial services industry, through the practice of securitization,9 spawning a byzantine mass of assignments, transfers, and documentation, has made it difficult for subsequent assignees to demonstrate that they have standing to bring foreclosure claims and prove the elements necessary to prevail in a foreclosure action in a manner compliant with the laws governing foreclosure, see 14 M.R.S. §§ 6321 –6325 (2013).10 In this process, some entities in the chain of assignments disappear, or their records are lost, making it difficult or impossible to acquire necessary records that qualify for admission under the business records exception to the hearsay rule, M.R. Evid. 803(6), in order to prove ownership of the mortgage, proper notice of defaults, and sums due and paid.
[¶ 14] The law, the rules of evidence, and court processes have not become more complicated in these...
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