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Maine court rules for GMAC in robo-signing case

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The U.S. District Court in Maine dismissed claims from homeowners seeking damages against GMAC Mortgage, the servicing arm of Ally Financial (GJM), for improper foreclosure.

In September, GMAC employees were found to be signing foreclosure affidavits without reviewing documentation as required by law in many states. On Oct. 1, a group of homeowners represented by Thomas Cox filed a class-action suit against GMAC. On Feb. 16, District Judge Brock Hornby dismissed three of the four claims spelled out against GMAC in the lawsuit. Hornby denied claims of abuse of process, which the plaintiffs alleged to be false certifications and affidavits. Hornby ruled that according to Maine law, even if the documents were false, the plaintiffs would have to seek to reverse the previous judgment in the foreclosure case, not start a new lawsuit. "A contrary ruling would mean that the outcome of every lawsuit could produce a later lawsuit by the unhappy loser, seeking damages on account of the outcome of the former lawsuit and claiming that it resulted from false testimony or false affidavits," Hornby wrote in the ruling. Hornby also dismissed claims for breach of good faith and fair dealing by GMAC and alleged fraud upon the court. Hornby said that fraud on the court may be grounds for other sanctions such as, again, obtaining relief from the original judgment in the foreclosure case but not to recover damages by a party in a later lawsuit. A fourth claim, however, is still pending. Plaintiffs are seeking damages under the Maine Unfair Trade Practices Act. GMAC has moved to dismiss that count, and Cox said the plaintiffs will submit a briefing to the court by March 4. Hornby signaled in his ruling that he would possibly deny this claim to remand the case to a state court, because a federal court below the U.S. Supreme Court does not have the jurisdiction to overturn a state judgment, here the original foreclosure case against Cox's clients. Cox told HousingWire Thursday that the ruling will affect other similar robo-signing cases against lenders across the country. "I think it's going to have a chilling effect and certainly [will be] cited by other lenders and servicers," Cox said. Write to Jon Prior. Follow him on Twitter: @JonAPrior

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