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Foreclosure is a legal process that requires a homeowner to return their house to a lender when they default on a mortgage. Historically, this process has favored banks and lenders, who typically have a thorough understanding of the legal aspect of foreclosure. However, a significant number of homeowners have begun to fight back over the last few years. Here are four ways people are doing it:
1. The foreclosing party did not follow state procedures.
There are certain procedures that need to be followed during the foreclosure process. In the event that the foreclosing party fails to follow these requirements, you may be able to challenge the foreclosure. If the court accepts your appeal, the foreclosing party will have to start the process again.
2. The foreclosing party lacks “standing.”
The foreclosing party should be able to prove that it owns the loan that is behind the foreclosure. As such, the foreclosure process should only be done by the loan owner or someone acting on their behalf. Previously, attorneys could successfully use this loophole as a foreclosure defense by asking the foreclosing party to produce the promissory note for the loan. This was often difficult to produce because of the tendency of banks and investors to sell and resell debts, sometimes over and over again.
Today, banks and other financial institutions take precautionary measures to ensure that there are no loopholes in the paperwork before starting foreclosure. Although your chances of success are minimal, you are still allowed to enquire about the promissory note in your defense.
3. The mortgage servicer made a major mistake.
This is one of the most effective foreclosure defenses. The mortgage servicer or loan servicer is the company that handles your loan account, which can be your original loan provider or a different company. You can challenge the foreclosure process based on mistakes such as:
- Imposing excessive fees or unauthorized fees, as per your mortgage contract
- Dual-tracking in violation of federal or state laws. Dual-tracking is when a foreclosing party pursues foreclosure while a foreclosure avoidance action is pending (e.g. loan modification or short sale)
- Crediting your payments to another party (meaning that you do not owe as much as the foreclosing party claims)
4. You are a service member on active duty.
The Servicemembers Civil Relief Act (SCRA) provides individuals who are on active duty with certain protections. For instance, the foreclosure process must be conducted in court if the homeowner took out the mortgage before they were called for active duty. There are also special protections for military members who get a mortgage after going on active duty.
You have a number of options to protect your investment if you are underwater on your mortgage, such as selling the house through a short sell process or applying for a loan modification. If none of these actions are viable and the lender initiates the foreclosure process, Drucker & Mattia can provide an experienced foreclosure attorney to help you develop a solid foreclosure defense. Get in touch today.
Drucker & Mattia PLLC
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