It has been exactly 18 months since I deposed GMAC Mortgage's prolific document signer, Jeffrey Stephan, in a case where I was defending a Maine homeowner in foreclosure. Stephan admitted to signing 8,000 to 10,000 foreclosure documents a month (that is about one a minute, if you do the arithmetic), including summary judgment affidavits used by courts as the basis for entering forclosure judgments. Stephan's affidavits were sent by GMAC to courts all over the country. Obviously, and as Stephan admitted, he did not bother to read those affidavits. He also admitted that he had no idea as to whether the foreclosure affidavits that he signed were true. He didn't even trouble himself to appear before a notary to be sworn, even though his affidavits said that he had done so. While Stephan admitted that he understood that judges were relying upon his affidavits to take away the homes of homeowners all over the country, he seemed serene and untroubled by his dishonesty in signing these false affidavits. (Conduct like this has since been awarded the slang term "robo-signing," but I never use it because it fails to adequately describe the dishonesty and deception involved.)
Subsequently, we developed the proof that GMAC Mortgage had been sanctioned in Florida for exactly this same kind of dishonesty four years earlier, in 2006, for an affidavit similarly signed in 2004. This was three years before the foreclosure crisis bloomed in 2007, so it was clear that GMAC's dishonest conduct was not some sort of harried response to the burgeoning workload of the foreclosure crisis. Rather, it was corporate policy crafted in normal times, and apparently borne of its intention to conduct foreclosures swiftly and on the cheap, without regard to standards of honesty and justice.
GMAC's unwillingness to change this fraudulent corporate policy after it was exposed in 2006 was evidenced by the fact that its employee, whose conduct caused GMAC to be sanctioned in Florida, was apparently not herself reprimanded or sanctioned by GMAC. To the contrary, and astonishingly, she was promoted, appointed to head GMAC's mortgage foreclosure department. She became Stephan's boss as he continued from 2008 well into 2010 exactly the same dishonest and fraudulent conduct that she had pioneered back in 2004.
Coincidentally, it was on December 6, 2011, only one day short of the 18-month anniversary of Stephan's June 7, 2010 deposition in a foreclosure case brought by GMAC Mortgage on behalf of Fannie Mae in the State of Maine, that the Maine Supreme Court ruled on an appeal in that case. See FNMA v. Bradbury, 2011 ME 120, __A.3d __. This is how the Justices of the Maine Supreme Court described the conduct of GMAC Mortgage, LLC:
The affidavit in this case is a disturbing example of a reprehensible practice. That such fraudulent evidentiary filings are being submitted to courts is both violative of the rules of court and ethically indefensible. The conduct through which this affidavit was created and submitted displays a serious and alarming lack of respect for the nation's judiciaries.
So, what did the Maine Supreme Court do about this outrageous assault on the justice system? Nothing.
Before we took the appeal to the Maine Supreme Court, the trial court had already ordered GMAC to pay my counsel fees incurred in taking Stephan's deposition and in bringing the motion that exposed the fraudulent conduct GMAC and Stephan to the court. But that trial court refused our request to use the power, expressly granted to it by Maine's rules of court, to hold GMAC in contempt and to impose penalties proportionate to its multiyear and multistate rampage of ethically indefensible misconduct. As the dissenting judge in the Maine Supreme Court decision stated:
Because Stephan admitted that he signed thousands of such affidavits and related documents each month and GMAC was previously sanctioned for similar conduct, there was good cause to believe that such misconduct was not limited to this case and that the management of GMAC and Fannie Mae, and their attorneys, knew or should have known of the wrongful manner in which the affidavit presented in this case was produced.
A Maine Supreme Court justice found that GMAC management knew of the fraud. Yet, because this expressly granted contempt power had never been used before, the Maine Supreme Court refused to order its application in this case.
The Justices of the Maine Supreme Court cited this lack of legal precedent as a basis for refusing to take decisive action against the misconduct of GMAC Mortgage. They refused to acknowledge the fact that no court had ever before been presented with such an extreme, outrageous, and widespread pattern of "reprehensible practice" and "ethically indefensible" conduct that evidenced such an unprecedented "serious and alarming lack of respect for the nation's judiciaries." The outrageous facts of this case cried out for a precedent setting ruling that such conduct must expose the perpetrator to serious and heavy contempt of court sanctions. A ruling fining GMAC Mortgage an amount of money proportionate to the hundreds of thousands of dollars it had saved by cutting corners in its affidavit signing practices was called for. The Maine Supreme Court didn't see it that way, and missed an exceptional opportunity to send a message to the mortgage servicing industry that its fraudulent and unethical conduct will not be tolerated.
This case was a perfect opportunity to have the Maine justice system speak out loudly and clearly in favor of the rule of law, to demonstrate its willingness and ability to protect the little guy against corporate bullies, and to take decisive action to protect the integrity of our judicial system. Such a decision could have been a beacon of justice to homeowners everywhere and a precedent to be relied upon by courts all over the country in sanctioning the similar conduct that has been perpetrated in their courts. Yet our effort to achieve this has failed and my devotion to exposing this injustice has for the most part been for naught.
My faith in our courts' willingness to protect individuals against what the Maine Supreme Court itself called the "fraudulent" and "unethical" conduct of the nation's fifth largest mortgage loan servicer (which is also largely owned by the American people -- Ally Financial, the parent of GMAC Mortgage, is 76 percent owned by taxpayers) is broken. Two days after this unfortunate decision, and exactly one and a half years after exposing this fraudulent and unethical conduct, I, as a lawyer who spent his entire career believing in our justice system, am left with a deep sense of despair and a lot of questions. If we could not succeed in obtaining justice in this case, what more can we possibly do? What will it take to cause courts to stand up to and halt this "serious and alarming lack of respect for the nation's judiciaries" by America's largest financial institutions? Is my continuing effort to try to help homeowners in foreclosure really worthwhile? How can I possibly tell clients to believe that our justice system will protect them against the depredations of America's financial industry? Why should I continue my volunteer efforts to expose injustice when the courts will not take decisive measures to sanction it and bring it to a halt when we provide such clear and convincing proof of such fraudulent conduct?
I have devoted my career to the legal system and to seeking justice for my clients. I believed in the integrity of the judicial system and its capacity to prevent fraud and injustice. It is sad to be nearing the end my career with that belief so deeply shaken.
Thomas Cox is a retired bank lawyer in Portland, Maine who serves as the Volunteer Program Coordinator for the Maine Attorney's Saving Homes (MASH) program. He represents homeowners in foreclosure, and assists and consults with other volunteer lawyers in providing pro bono legal services to these Maine homeowners.