The Law Court of Maine has issued a number of recent decisions which have made the role of the default industry markedly more difficult. For instance, the Deschaine and Pushard cases have resulted in numerous situations of free homes being awarded to debtors because of minor defects in the foreclosure process and restrictive views of the default industry’s remedies on defaulted loans. In this atmosphere, it is important to choose which battles to fight and where to exercise discretion.

Since 2011 the Law Court has made it clear that in order for business records to be admitted under the “business records exception” (Rule 803(6)) a servicer must show by foundational testimony evidence of the record keeping of all of the servicers involved in the servicing of a particular loan since its’ inception. (Beneficial v. Carter, 2011 ME 77) This is clearly a difficult, if not impossible, task since it requires live, personal knowledge based testimony concerning each prior servicers’ practices in sufficient detail to lay the proper foundation for the admission of the records. The common practice had been evolving for such records to be admitted without that requirement being met, if there was no objection to the admission of the records, and no appearance by the debtor. 

There is a small, but very competent and active defense bar in this area which is organized under the name “Maine Attorneys Saving Homes” (MASH). MASH has adopted the practice of appearing at trial without filing any appearance until the actual day of trial. Pursuant to that strategy, a MASH attorney appeared for trial on the Quint case April 14, 2017, objected to the business records being presented and the trial court did not admit them into evidence. Under the subsequent decisions referenced above, the debtor was given a house free and clear of the mortgage. 

At the time of that decision at the trial court, an argument could be made that MASH’s appearance strategy sought an unfair advantage and some courts were granting continuances. Since the Quint court did not allow the records to be admitted, and an appeal was taken, the burden of proving the records became significantly more onerous (The servicer was forced to try and show “that a contrary finding was compelled by the evidence”. Handrahan, 2011 ME 15). 

The Law Court found the burden was not met despite the extensive background of the witness testifying on behalf of the servicer, (seven year experience in various aspects of the current servicer’s business practices including the boarding of records from prior servicers.). The Law Court also specifically held that the appearance of MASH counsel on the day of trial was not prejudicial, removing the basis for a continuance.

The subject case is referenced Keybank v. Quint, 2017 ME 237 (2017). The net result is a strong reaffirmation of the near impossible foundational requirements at a foreclosure trial and the endorsement of MASH’s policy of unannounced appearance at trial. While it may have been more prudent not to press this particular appeal, we are left with the result. We will need to become more diligent in the proofs necessary at trial, and that will undoubtedly increase the time, effort and cost involved in these cases. We have already seen courts specifically reference this case from the bench, and hold our clients to a higher standard, even if there has been no appearance by the debtor, and the property is abandoned. 

Doonan, Graves and Longoria, LLC has been involved in the real estate market since 1986. We are especially proud of our relationships with The Title Research Group LLC and Stewart Title Guaranty Company which enable us to succeed in complex title and litigation issues throughout New England.

John Doonan is partner at Doonan, Graves & Longoria, LLC, Beverly, Mass.