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GMAC Unit Among Defendants in Patent Lawsuit

Ramsden v. GMAC Bank, et al

January 12, 2009

By MortgageDaily.com staff

A GMAC Financial Services subsidiary and a California-based lender are being sued for alleged unauthorized use of a patented system that pays down consumer debt through credit lines.

Ramsden Inc. announced today that it filed the lawsuit in U.S. District Court for the District of Utah Central Division against Midvale, Utah-based GMAC Bank and San Ramon, Calif.-based CMG Mortgage Services. The lawsuit was originally filed in October 2008.

The defendants are accused of infringing on its U.S. patent No. 7,254,556, System and Method for Paying Down Debt Using an Equity Loan Revolving Line-of-Credit. The system, reportedly patented on Aug. 7, 2007, was created by Ramsden President and Chief Executive Officer John D. Fry.

"Most loan programs have appealed to borrowers by leveraging them into larger loans, by taking cash out or adding on consumer debt every time there is a drop in interest rates -- all the while extending out further and further the day when the homeowner is free and clear of the mortgage," Fry said in the announcement. "My patent has a spreadsheet model, which demonstrates paying off a homeowner's mortgage in as little as eight to 12 years, while maintaining the mortgagor's necessary cash flow needs and protecting the lender's investment through rapid amortization."

The press release indicated that Fry was the former president and CEO of CMG Funding in Salt Lake City.

A copy of the complaint indicates that one of the infringing programs being marketed by the defendants is the "Home Ownership Accelerator."

"GMAC Bank and CMG Mortgage Services have infringed and continue to infringe by making, using, selling and/or offering to sell, or allowing others to do so, products covered by its patent," Ramsden's lead counsel James B. Belshe said in the statement.

McKinney, Texas-based Ramsden is asking for a jury trial and hopes to win damages, attorneys' fees and an order preventing further infringement.

A GMAC spokeswoman said it is the company's policy not to comment on active litigation.

CMG did not immediately respond to a request for a statement.

Ramsden, Inc., a Texas Corporation, v. CMG Mortgage Services, Inc., a California corporation, and GMAC Bank, a Utah Corporation, Defendants.
Case No. 2:08-cv-00785-TS, Oct. 9, 2008 (U.S. District Court for the District of Utah Central Division)

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