Committee OKs Bellows bill against improper foreclosure fees

Legislation introduced by Sen. Shenna Bellows, D-Manchester, to protect homeowners from improper foreclosure was endorsed by the Legislature’s Judiciary Committee with a 6-4 vote on Wednesday.

The bill would close a potential loophole in foreclosure law that an out-of-state company is trying to use to get out of paying for consumers’ legal fees after the company brought an improper foreclosure.

Mortgages are often sold from one company to another creating confusion for homeowners as to who their mortgage holder actually is. In some cases, including this one, companies claiming to be mortgage holders foreclosed on homeowners, even though they did not hold the mortgage.

“Common sense would say that if you go to court, and you try to take away a person’s home, and the court finds you don’t have standing to do so, then you should pay for the homeowners’ legal fees,” said Sen. Bellows. “Homeowners shouldn’t have to bear the extraordinary legal costs of an improper foreclosure.”

LD 1047 fixes the legal technicality to change “mortgagee” to “the plaintiff.”

When a mortgage holder and a homeowner complete a foreclosure action, the prevailing side is supposed to be awarded reasonable attorneys’ fees. This balanced approach provides protections for both sides of the dispute and encourages mediation or settlement on both sides.

Maine has the seventh highest inventory of foreclosures in the country. The vast majority of foreclosure actions in Maine are brought by large, out-of-state banks, making this bill extraordinarily important in protecting homeowners’ rights.

LD 1047 faces further action in the Judiciary Committee and votes in the House and the Senate.