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What Is Foreclosure Defense?

Foreclosure Defense – What Is It And How Does It Work?

Foreclosure defense is a fairly new idea in the financial world. With so many homeowners facing foreclosure in recent years coupled with the fact that many banks and lending institutions used questionable practices in making loans and in transferring loans that were sold, it emerged.

Here is an explanation of what foreclosure defense is and how it might help you as a homeowner.

Since 2007, nearly 4.2 million people in the United States have lost their homes to foreclosure. By early 2014, that number is expected to climb to 6 million. Historically, the legal process of foreclosure, one that requires a homeowner to return his or her house to a lender after defaulting on a mortgage, has tilted in favor of the banks and lenders — who are well-versed in the law and practice of foreclosure.

Over the past few years, a growing number of homeowners in the foreclosure process have begun to fight back, by stalling foreclosure proceedings or stopping them altogether. The legal strategy employed by these homeowners is known as foreclosure defense…

…The goal of the foreclosure defense strategy is to prove that the bank does not have a right to foreclose. The chances of success rest on an attorney’s ability to challenge how the mortgage industry operates. The strategy aims to take advantage of flaws in the system, and presumes illegal or unethical behavior on the part of lenders.

Foreclosure defense is a new concept that continues to grow alongside the rising tide of foreclosure cases. While some courts accept foreclosure defense arguments, others find them specious and hand down decisions more beneficial to banks than to homeowners…

…If you are considering a foreclosure defense, it is imperative that you retain the services of professional legal counsel. Regardless of how educated you are about the process, this is an area of law that requires a well-thought-out, competent presentation in a state or federal court.

A successful foreclosure defense may prohibit or delay the foreclosure process or it simply may induce a lending institution to negotiate a loan modification that allows you to stay in your home — which, of course, was the goal in the first place.- via Debt.org

Some Types of Foreclosure Defense

A defense against foreclosure must have grounds on which to be raised. There are more reasons than you might think that a homeowner can challenge the validity of a foreclosure. Here is a look at some of the reasons that a foreclosure defense can be brought.

How to Raise a Defense to Foreclosure

In order to raise a defense to the foreclosure action, you must bring the issue before a judge. This is automatic in about half the states, where foreclosures are typically accomplished through civil lawsuits and judicial foreclosure orders. In the other states, foreclosures typically take place outside of court (these are called nonjudicial foreclosures) and you have no automatic means to mount a legal challenge. To have your defenses ruled on by a judge in these states, you have to file a lawsuit alleging that the foreclosure is illegal for some reason and asking the court to put the foreclosure on hold — pending the court’s review of the case…

The Terms of the Mortgage Are Unconscionable

One such justification is a principle known as unconscionability — that is, the terms of your mortgage, or the circumstances surrounding it, are so unfair that they “shock the conscience of the judge.” In one case where this defense was successful the borrower spoke very little English, was pressured to agree to a loan that he obviously couldn’t repay, was not represented by an attorney, and was unaware of the harsh terms attached to the loan (such as an unaffordable balloon payment ).

You Are a Servicemember on Active Duty

If you’re on active military duty, the Servicemembers Civil Relief Act (SCRA) provides you with special protections. Most importantly, if you took out your mortgage before you were on active duty, your foreclosure must take place in court even if foreclosures in your state customarily occur outside of court. If a foreclosure is initiated while you’re on active duty, you can receive a postponement of the proceeding by requesting it from the court in writing.

The Foreclosing Party Didn’t Follow State Procedures

In some cases, the foreclosing party doesn’t follow state procedural requirements for bringing a foreclosure action (for example, it fails to properly serve on you a notice of default required by state law). If this happens, you may be able to challenge the foreclosure. If your challenge is successful, the court will issue an order requiring the foreclosing party to start over.

The Foreclosing Party Can’t Prove It Owns the Mortgage

Only the mortgage holder (the loan owner or someone acting on the owner’s behalf) may bring the action. If your mortgage, like many, has been sold and bought by many different banks, lenders, and investors, proving just who owns it can be difficult for the last holder in the chain. Appropriate documentation of who owns the mortgage must be presented, and this is often difficult for the foreclosing party to do.
– via Nolo.com

Are you considering foreclosure defense? Have you gotten advice from a professional?

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