If you've been notified that you're in danger of losing your home, you have probably experienced panic, dread, and fear. There are so many unknowns. Will you be able to keep your home? Will your credit be ruined? Where will you move, and when? How will your life change when you lose your home?
Hold the phone! Those are all valid questions, but the first question you should ask yourself is: How am I going to fight foreclosure and stay in my home? It's not that you're being falsely accused of something, or that the bank isn't entitled to foreclose on you for not paying your mortgage. But you have rights too, and it is legal, ethical, and in your best interest to assert all of your rights with the help of an attorney when facing something as life-altering as foreclosure.
Effective foreclosure defense can allow you to:
- Stay in your home while you fight for the best resolution to your case, which can take months or years.
- Get a deficiency judgment waiver for any situation in which you leave your home, such as a foreclosure sale, short sale, or deed in lieu of foreclosure agreement.
- Have time to apply for a loan modification that reduces your principal, interest rate, and monthly payment.
So, defending against foreclosure is vital, but most homeowners are ignorant of their options when faced with the threat of foreclosure, and why wouldn't they be? Foreclosure is probably a once in a lifetime event. There don't seem to be very many possibilities when you're learning about a process as you go through it for the first time. Conversely, someone who's well-versed in a subject knows of choices available that the beginner couldn't imagine. Some of the possible defenses that can be used to delay or dismiss foreclosure follow.
Lack of Standing
When foreclosure proceedings start in judicial foreclosure states, a lawsuit must be filed against you. You become the defendant, and the foreclosing party becomes the plaintiff. The plaintiff must show the courts that they are the ones legally entitled to foreclose on you. That, in legal terminology, is called standing. You can bring the plaintiff's standing into question as a foreclosure defense, and they must prove that they have the standing to foreclose. Why wouldn't they have standing? Ownership can get very complicated with most loans being securitized and bought and sold multiple times. The bank's errors, improper or incomplete documentation, or fraud may cause them to have a hard time proving their standing. If they can't prove it, the lawsuit will be dismissed. Also, most states require the plaintiff to own and hold the mortgage and note at the time they sue. If their documents don't show that they did, they can't take your property.
Not the Real Party in Interest
You might assume that it's a pretty straight forward matter to determine who has a right to foreclose on your home. Isn't it whoever you haven't been writing checks to? Maybe not. When a mortgage loan is made, there is a promissory note that is the borrower's responsibility to pay back, and the security interest that the lender has in the property in the form of a mortgage or deed of trust. Whoever is assigned the note and mortgage is the one with the right to foreclose. Problems arise when the mortgage and note are assigned to servicers, trustees, or holders and the right documentation or original note can't be found. If the ownership of your mortgage isn't clear, you may be able delay foreclosure for a considerable amount of time.
Failure of Condition Precedent
If the foreclosing party fails to comply with the requirement to serve the defendant with a notice of default or intent to accelerate, they may have to start the process over. Failure to properly follow the rules of notification may help to defend you from foreclosure.
Unfair Lending Practices
If your lender deceived you, acted unfairly, or failed to disclose required information, you may be able to challenge foreclosure because of it. The federal Truth In Lending Act (TILA) requires lenders to disclose the annual percentage rate, payment schedule, and other information about the loan. Lenders who do not give borrowers the correct information TILA requires have broken this law. An amendment to TILA called the Home Ownership and Equity Protection Act (HOEPA) sets limits on late fees and addresses “...abusive practices in refinances and closed-end home equity loans with high interest rates or high fees.”
There are many other defenses that may be raised, such as unconscionable terms, foreclosing on an active service member, failure to properly invoke the court's subject matter jurisdiction, and some that are state specific, such as verification of complaint in Florida.
You can't use one of these foreclosure defenses if you don't know they exist or how to raise them. There are federal and state laws intended to protect homeowners, and defenses that can be raised based on technical aspects of the law that can delay or dismiss foreclosure proceedings.
Terminology dealing with foreclosure defense law can sound like a different language to you if you're not a lawyer or paralegal. Some of it literally is a different language: Latin. And a lot is English, but sounds like another language because it's vocabulary that you don't hear in everyday conversation. Every profession has its own language, and you need someone who speaks “legalese” to help you navigate foreclosure defense when you're looking at the possibility of foreclosure. An experienced attorney can be retained for a very reasonable fee and may be able to help you save your home. Access to their knowledge and services are well worth the cost.
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