One of the most difficult and disappointing situations is facing a foreclosure. In the past most homeowners had to simply accept a foreclosure, but scandal after scandal has shifted the legal environment, and today homeowners have several options to defend themselves against foreclosure.
As with all legal procedures, foreclosure defense can take a lot of time. There is a great deal of paperwork to fill out, and a number of procedures to follow. However, during the proceedings, it’s possible to delay your foreclosure until the matter is resolved. If the judge rules in your favor, you might even stop the foreclosure process altogether.
While it’s almost never a “slam dunk” when you engage in any legal proceeding, the changing legal climate improves your chances of a successful foreclosure defense, as long as you are thorough in your documentation and argument.
Raising a Foreclosure Defense
How you raise your foreclosure defense largely depends on what the laws are in your state. In some states, all foreclosures have to go through the courts, so you automatically get a chance to defend your home ownership. In other states, you will need to file a lawsuit in order to defend against the foreclosure. This makes the process more difficult, as you will have to find grounds for a lawsuit before you can begin making requests from your lender.
While it varies by state, here are some of the more common foreclosure defenses:
- No proof of mortgage ownership: The foreclosing party should be able to prove they own your mortgage. While this seems obvious, many lenders have lost mortgage paperwork as a result of the repeated buying and selling of mortgages that has become common in recent years. If the foreclosing party cannot produce the original paperwork behind your mortgage, you’ll have a strong case in court.
- Unconscionable mortgage terms: To use this defense, you have to prove that the terms of your mortgage are extremely unfair. In many cases, this will include proving that you were put under undue pressure by the mortgage lender or were not in a position to fully understand the terms of the loan. This defense is often used by borrowers who don’t speak English or those who have been taken advantage of due to a learning disability.
- Unfair lending practices: If you can prove that the original lender engaged in unfair lending practices by violating federal or state law, you can mount a foreclosure defense, even if the original lender no longer owns the loan. You can reference the Truth in Lending Act and the Home Ownership and Equity Protection Act to find out what practices are deemed unfair.
- State procedures weren’t followed: In some cases, the party initiating the foreclosure may not have followed the required state procedures. For example, some states require a properly served notice of default in order to initiate a foreclosure proceeding. Many judges will ignore minor violations of state procedures, but if a violation caused damages to you, you may be able to claim this as a defense. Know the law in your state. If the lender or servicer hasn’t followed correct procedure, it could help your case.
- Serious mistakes made by the mortgage servicer: The most common serious mistake a mortgage servicer makes is overstating the amount of money it would cost to reinstate your mortgage. This can happen when they impose unfair or excessive fees that make you unable to get your mortgage back on track. A less common error is that your payment may have been credited to the wrong account, leading to a foreclosure. If either one of these situations occurs, you can use it to bolster your defense or even as the basis for your argument against foreclosure.
- Active duty service member: You have special protections as an active duty member of the military. For mortgages that were initiated before you went on active duty, all foreclosures must take place in court, no matter what state law says. Plus, if you are active duty when the foreclosure is initiated, you are entitled to a nine-month postponement if you make a request in writing to the civil court overseeing the proceedings. Active duty service members can contact Military Legal Assistance in order to get more information about how to proceed.
If you want to mount a foreclosure defense, it’s usually possible. Chicago Agent Magazine reports that as much as 80% of residential home loans made between 2003 and 2010 contain lending violations. This means that there is a reasonable chance that your lender or servicer made a mistake that can help you keep your home. If you are concerned about foreclosure, consider employing a knowledgeable attorney to help you mount a foreclosure defense.