Another Faulty Affidavit Sinks One More Foreclosure Sale; Add One More Lower Court Ruling To List Of Those Negated On Appeal

In another case highlighting the use faulty affidavits by banksters in foreclosure actions, the Maine Supreme Court recently vacated a foreclosure judgment, finding the affidavit was inadequate to establish the admissibility of the purported business records being introduced into evidence in connection with a motion for summary judgment.(1)

For the ruling, see Beneficial Maine Inc. v. Carter, 2011 ME 77 (Me. July 7, 2011).

(1) From the ruling ("Richmond" is the individual who signed the faulty affidavit) (bold text is my emphasis):

• [¶ 15] In the matter before us, Richmond was not an employee of Beneficial itself but of Beneficial's "servicer," HSBC. Although Richmond's affidavit states that the records were kept by Beneficial in the ordinary course of business from information supplied at or near the time of the recorded events by a person with knowledge of those events, it does not provide any basis for Richmond's personal knowledge of Beneficial's practices.
  
  Richmond does not purport to be the custodian of the records, nor does she explain the source of her understanding of Beneficial's "daily operation" or show the "firsthand nature of [her] knowledge." Murphy, 2011 ME 59, ¶ 10, 19 A.3d at ___ (quotation marks omitted). Her affidavit indicates only that she has personal knowledge of "this account and of the records of this account" and that she has "access to the records." The affidavit provides no elaboration on the nature of HSBC's role as Beneficial's "servicer," or of HSBC's responsibilities and activities with regard to Beneficial's accounts.
  
  [¶ 16] Although it is possible that an employee of HSBC—perhaps even Richmond herself—may have personal knowledge of both entities' practices for creating, maintaining, and transmitting the records, the affidavit does not report the basis for Richmond's knowledge of (1) Beneficial's practices for creating, maintaining, and transmitting the records at issue; (2) HSBC's practices in obtaining and maintaining the bank's records for HSBC's own use; or (3) HSBC's integration of the bank's records into HSBC's own records. See Murphy, 2011 ME 59, ¶ 10, 19 A.3d at ___; Barr, 2010 ME 124, ¶¶ 18-19, 9 A.3d at 820-21; Soley, 481 A.2d at 1127; M.R. Civ. P. 56(e). Richmond did not, therefore, establish that she was a "custodian or other qualified witness" who could provide trustworthy and reliable information about the regularity of the creation, transmission, and retention of the records offered. M.R. Evid. 803(6). Because Richmond's affidavit could not establish the foundation for the records' admissibility, the court could not properly consider those records on summary judgment. See M.R. Civ. P. 56(e).
  
  [¶ 17] Beneficial presented no other evidence regarding the mortgage, the default, or the other elements set forth in Chase Home Finance LLC v. Higgins, 2009 ME 136, ¶ 11, 985 A.2d 508, 510-11, to support its motion for summary judgment. Because of the deficiencies in the affidavit, Beneficial has failed to demonstrate on summary judgment that the Carters were obligated by, and defaulted on, the mortgage note, and that Beneficial is entitled to judgment as a matter of law. See M.R. Civ. P. 56(c), (e); Murphy, 2011 ME 59, ¶ 17, 19 A.3d at ___. Accordingly, we vacate the summary judgment entered in favor of Beneficial.

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Editor's Note: The court's mention of 'Murphy' in the above excerpt is a reference to HSBC Mortgage Services, Inc. v. Murphy, 2011 ME 59 (Me. 2011), a recent case where the Supreme Judicial Court of Maine, in vacating a foreclosure judgment, slammed HSBC in determining that the affidavits they submitted were inherently untrustworthy and, therefore, did not establish the foundation for admission of the attached documents as business records necessary to properly support a grant of summary judgment.