Maine Law Court Overturns Free House Rule

Earlier this month, the Law Court issued a decision on Finch v. U.S. Bank, overturning precedent set in 2017 by Pushard v. Bank of America. That case resulted in borrowers receiving a decision that essentially resulted in a free house with no mortgage obligation. Finch overturns this and prevents the unjust enrichment of borrowers in default.

The decision in Pushard hinged on a flaw in the notice of default leading the court to side with the borrower. In Pushard, the court determined that when the case is decided in favor of the borrower, the lender is barred by the principal of res judicata that prevents re-litigation of the same case. The practical result was that a borrower received a free house with no mortgage. Finch overturns the “free house” rule and allows for lenders to litigate after an error in the notice of default.

The Law Court invited amicus briefs on this issue in a similar case, J.P. Morgan Mortgage v. Moulton to provide additional legal arguments from interested parties. The League filed a brief that encouraged the Law Court to overturn the precedent set last decade. The Law Court has not yet issued a decision in J.P Morgan v. Moulton but will do so in accordance with the new precedent they have set in Finch v. U.S. Bank.