Couple sues bank and real estate company for foreclosure on Caribou house

CARIBOU, Maine – August 27, 2024 – This home at 35 York Street in Caribou is the subject of a lawsuit filed by homeowners David and Sandy Marrett. They claim a local bank and real estate company conspired to force them into foreclosure. (Melissa Lizotte | Aroostook Republican)

CARIBOU, Maine – A couple is suing a Caribou bank and a real estate company, among others, for allegedly conspiring to illegally auction their home and causing water damage that prevented the home from being sold.

David and Sandy Marrett, who live in East Longmeadow, Massachusetts, are seeking unspecified damages for financial loss and emotional distress, as well as punitive damages and legal punishment for the defendants.

In 2021, the Marretts fell 75 days behind on mortgage payments on their home at 35 York Street in Caribou after David was diagnosed with cancer, according to the lawsuit filed Aug. 23 in U.S. District Court in Bangor.

The couple notified their bank, Aroostook County Federal Savings & Loan in Caribou, of the situation and said they intended to convert the two-story home into a duplex to generate more income and be able to make mortgage payments.

The Marretts, who are representing themselves, claim the bank began foreclosing on the home prematurely, violating the federal Real Estate Settlement Procedures Act, court documents show. The law prohibits financial institutions from initiating foreclosures before borrowers are 120 days delinquent on their mortgage payments.

In October 2021, the Marretts decided to sell their home after being unable to pay off the loan due or find legal representation. According to court documents, they hired Cathy Duffy of Progressive Realty in Caribou to handle the sale.

Two weeks later, Aroostook Savings & Loan offered the Marretts a deed of assignment in lieu of foreclosure, and Duffy stated she would resolve the matter with the bank, the lawsuit states. A deed of assignment in lieu of foreclosure allows a homeowner to transfer his or her title to the mortgage lender in exchange for relief from the mortgage.

According to the lawsuit, the bank’s Caribou branch manager, Beth Henderson, allegedly pressured the Marretts to accept the deed in lieu of foreclosure. The Marretts refused.

The Marretts allege that Duffy and Henderson concealed the fact that Henderson also works for Progressive Realty and that they conspired to deprive the plaintiffs of their property rights in order to profit from the sale of the house without the Marretts’ knowledge or consent.

Henderson is listed as the selling agent on Progressive Realty’s website. She and Duffy did not respond to requests for comment Tuesday.

The Marretts claim that Aroostook Savings & Loan took over maintenance of the house and restored water and oil services that the couple had previously cut off, and that all of the Caribou Utilities District’s water bills were forwarded to the bank without their knowledge.

Six months later, in May 2022, Sandy Marrett’s mother went to check on the house but couldn’t get in because her key no longer worked. She heard running water and called the Caribou Utilities District, which turned off the water.

After learning of the situation from her mother, Sandy Marrett traveled to Caribou and allegedly found that 1.7 million gallons of water had flowed through the property over a period of months, causing significant damage, the lawsuit states.

The Marretts have also sued Zurich Insurance Company of Illinois, the Waterville-based law firm of Marden, Dubord, Bernier and Stevens, PA, the Portland, Maine-based law firm of Monaghan Leahy, LLP, Penobscot Superior Court Judge Bruce Mallonee and Caribou attorney Richard Solman.

After the flood at 35 York, the Marretts filed a claim with Zurich Insurance, but the company later denied the claim without giving a reason, the lawsuit says. Then Aroostook Savings & Loan allegedly opened a claim in their name and using the bank’s address, without their permission, court documents show.

The insurance company’s lawyers at Marden, Dubord, Bernier and Stevens allegedly harassed the Marretts and attempted to persuade them to drop a countersuit against Aroostook Savings & Loan.

The Marretts claim that in 2023, Mallonee failed to correct attorneys who claimed their counterclaim was illegal and then rejected a revised counterclaim after correcting an error naming Aroostook Savings & Loan as the plaintiff.

In October 2023, Solman allegedly told the Marretts that an insurance claim had been filed in their name, although this turned out to be untrue, according to the lawsuit.

During a December 2023 hearing on the Marretts’ claims, Mallonee granted Aroostook Savings & Loan’s bid for foreclosure. The Marretts then filed a motion for judgment on their original counterclaim against the bank, which Mallonee denied in July.