Since 2007, over 4 million Americans have lost their homes due to foreclosure. By early next year, that number is expected to reach 6 million. Historically, the legal procedure of foreclosure, in which a homeowner is required to relinquish his or her home to a lender upon mortgage default, generally favored banks and lenders who were well-versed in the practice.
However, recently this trend has reversed as many of today's homeowners who receive their notice of default are choosing to engage in an effective foreclosure defense process to stall, and often cease, the foreclosure proceedings filed against them. These recent successes can be attributed to the greater encouragement of mortgage modification and the piling evidence that, as a whole, the real estate industry has been largely perpetrators of fraudulent and predatory lending practices. The discovery of which has impacted judicial attitude and largely shifted court sympathies towards homeowners perceived as victims.
Can You Avoid Being Served Foreclosure?
Yes! But it takes quick action to guarantee success. You cannot delay or stop the foreclosure process by avoiding or refusing to accept a notice of default.
Homeowners who are having trouble making their mortgage payments have several options that can help them avoid losing their home:
- Seek out government assistance
- File for bankruptcy
- Sell your home yourself
- Negotiate with your lender
- or, Enact a foreclosure defense process and fight the foreclosure
These last two options are becoming more popular to homeowners as it gives them the best opportunity to retain their home and achieve greater financial stability.
Common Foreclosure Defenses
If you choose to bring the issue of your foreclosure before a judge, you will need to choose a foreclosure defense process to raise. Below are 4 of the more common defenses attorneys are using across the country to help homeowners stall and avoid a foreclosure.
1. The Mortgage Terms are Unconscionable
There is a branch of law known as “equity” that focuses on providing fairness to situations in which a legal statute is unable to provide necessary relief. One of the justifications used to measure 'fairness' is a principle known as unconstitutionality. In other words, if the mortgage terms are deemed to be so unfair as to shock a judge's conscience, a foreclosure may be overturned. Examples include language barriers between lender and borrower, the pressuring of a borrower to accept a loan that he or she could obviously not repay, and the hidden attachment of harsh loan terms such as balloon payments.
2. Borrower is a Servicemember on Active Duty
The Servicemembers Civil Relief Act provides people who are active duty special protections such as the necessity of a foreclosure to take place in court and the postponement of the proceeding when requested by the borrower.
3. The Foreclosing Party Ignored State Procedures
If your bank or other lender fails to properly serve you a notice of default, you may be able to challenge the foreclosure. Often in these cases, the court will require the proceedings to start over, gaining you precious time to act.
4. The Foreclosing Party Can't Prove it Owns the Mortgage
You might have success in your foreclosure defense process if you can prove that your foreclosure notice of default was not provided by the correct mortgage owner. Today, many mortgages are sold and bought through a chain of different lenders, bands, and investors.
Negotiate with your Lender
Another way to avoid being served foreclosure is to negotiate with your band or mortgage lender. This can either be done personally or through a legal professional well equipped to provide you with the best of terms. There are three ways to effectively negotiate and reach an agreeable solution: Forbearance, Loan Reinstatement, and Loan Modification.