The Consumer Protection Clinic secured a victory for 250 Maryland homeowners on Jan. 14 when a Baltimore judge dismissed their foreclosure cases.
The Clinic, acting as co-counsel with Civil Justice, Inc., a Baltimore nonprofit that specializes in foreclosure issues, filed a motion requesting the dismissal of any foreclosures by GMAC Mortgage that are pending in Maryland courts that used affidavits from Jeffrey Stephan. Late last year, Stephan acknowledged in a deposition that he signed hundreds of affidavits per day, even though he did not have personal knowledge of the facts stated in the affidavits. This practice of "robo-signing" has frozen foreclosure actions nationwide and brought a flurry of investigations by regulators.
"It's another example of an attack on the integrity of the courts," said Holland to the Baltimore Sun in November 2010. "These affidavits are integral to the honest operating of the foreclosure process."
This ruling is only part of a larger legal process by GMAC to dismiss over 10,000 foreclosures nationwide that used Stephan affidavits. And while this ruling gives Maryland consumers facing foreclosure by GMAC some breathing room, it's not the "magic bullet" that halts the proceeding completely. GMAC will still be able to re-file, but they must basically file the case again, and at their own expense. In addition, any re-filed foreclosure will be subject to Maryland's new foreclosure rules requiring notices, mandatory foreclosure mediation, and other protections.
"This was a creative litigation strategy, and many practitioners told us that 'there is no such thing as a defensive class action,'" said Holland. "Judging by our results, I think we proved them wrong."
The Clinic and Civil Justice are also awaiting a ruling on their motion in Montgomery County to dismiss all foreclosure cases with documents signed by Xee Moua of Wells Fargo. She also acknowledged the practice of robo-signing in a deposition.
Holland, a visiting faculty member with a private practice in Annapolis, is teaching a course in consumer protection law and is running the School's Consumer Protection Clinic. His students are getting a real-time lesson on the foreclosure crisis and other consumer debt collection cases. Holland is a graduate of the School of Law, and earlier this year was named by his peers a "Maryland Super Lawyer" in the area of Consumer Law for the third straight time.