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Decide How Best To Fight The Foreclosure Lawsuit

Homeowners are encouraged to begin learning about how the legal process of foreclosure works and what role the courts play in forcing the loss of a home. Although there are good arguments that the government does not have any authority to take away someone’s home, the sad truth is that it will if the owners do not defend their home vigorously in court. But the tactic borrowers use to save a house will widely differ depending on what their goals are for both their short and long term financial health.

One reason homeowners may try and defend against a foreclosure is simply to get as much time as possible before they sell the house, refinance with a foreclosure lender, or just save up enough to move out comfortably. The goal is not to win the case, per se, but to drag out the process in the court system through a series of motions that must be ruled upon, hearings that must be held, and a long discovery process that can take months to be resolved. The bank, of course, will be adding more fees and interest to the loan, but this may not matter much to homeowners who already have scarred credit and need the opportunity to repair their finances.

Another path borrowers can take in defending a foreclosure in court is to try and force the bank to negotiate some aspect of the loan or winning a case that indicates the lender has overcharged for a mortgage. Homeowners may try and drag the process out and request the judge to force the bank to consider a loan modification or other solution, or the owners may try and make the case that, while they are behind on the loan, they should have to pay a lesser amount than the bank is demanding for reinstatement. Winning counter claims against the bank may also lessen the damage of the foreclosure by rewarding the owners with some monetary damages.

Possibly the most risky but certainly the most rewarding method to use in court is trying to show that the bank violated major provisions of the Truth in Lending Act (TILA) and that the loan should be rescinded entirely. This means that the homeowners would get to keep and save their home, the foreclosure would be ended completely, the lien on the house would disappear, and the bank would have to pay back every single penny the homeowners have ever paid the lender. Obviously, this is a very serious loss for the bank, and it is up to homeowners to learn more about the types of violations that would result in rescission of the loan.

Even if they know how the court system works and how to file certain documents in the foreclosure case, without really having an end goal, homeowners may have a severely negative experience in the courts. But as long as they have a clear idea of what they want to accomplish, they can usually get some concessions from the court and their mortgage company, either on their own or with the assistance of a qualified attorney. While every borrower may not win their case by defending against the bank’s lawsuit, it is certain that every one who does nothing will lose and the lender will be awarded a swift foreclosure process and auction date.

By: Nick Adama

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Challenging The Lender’s Right To Sue For Foreclosure

Many homeowners are becoming more aware of the defense to foreclosure that has come to be known as the "produce the note" strategy. This involves challenging the foreclosing lender or servicing company on its legal right to sue the borrowers in the first place. Essentially, if the bank cannot prove that it owns the note and mortgage or deed of trust, it does not have the right to bring a foreclosure action against the homeowners.

However, not every challenge to produce the original loan documents has been successful, typically due to procedural errors or other easily correctable mistakes on the part of the borrowers. Homeowners should be aware of certain actions that have been taken in successful cases, so they have a better chance of having their own foreclosure thrown out of court for the bank’s inability to prove legal standing.

First, if the homeowners are being sued by the lender in a judicial foreclosure state, it is important to deny in the answer to the complaint that the plaintiffs own the note and mortgage in the first place. This real party in interest issue can be raised through an affirmative action claim or by filing a motion with the court. However, if the homeowners do not raise the issue, the court will assume the issue of standing is not debated.

It is also important for homeowners to do their homework in checking the local land records for the property being foreclosed on. If there are documents recorded with the county indicating a different chain of title than the one the bank is trying to show through the lawsuit, the discrepancies may be enough to have the case thrown out until the foreclosing company can show it owns the note.

Banks will often submit unsupported affidavits when it will be difficult or impossible to produce the original note. But these documents can be challenged by the homeowners in their answer to the lawsuit. Simply having an officer of the foreclosing company state that it owns the original paperwork is not sufficient if it cannot produce the note upon the borrowers’ request.

Especially if there are other documents indicating another company may be attempting to collect on the mortgage, the issue of standing and who owns the original note become vital. If the court allows the lawsuit to move ahead without proof of standing, the borrowers may be in danger of being sued again by the correct party. Thus, it is important to keep and obtain any documents showing any other company’s interest in the debt.

Finally, homeowners can demand that the lender produce evidence to show how, when, and whether the original documents had been assigned to the foreclosing party. Courts will be likely to look on this type of request as reasonable, especially if there are other questions of which company owns the loan or if there is other evidence (such as documents filed with the county) showing an incomplete chain of title.

In light of all the securitization and chopping up of rights to mortgages, the produce the note strategy of challenging the bank’s right to bring a lawsuit against borrowers is becoming a more wide-spread defense to foreclosure. While it may not solve every homeowner’s mortgage problems, it can delay a foreclosure by a period of months or years while the lender attempts to locate the relevant paperwork, time that the owners can use to save up money for moving expenses or to get back on track with payments.

By: Nick Adama

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What Are Your Foreclosure Rights?

If you are going to fight the foreclosure of your home, you need to know what your foreclosure rights are and how to use them to your best advantage. This means getting educated and if you want to save your home, it means getting educated quickly.

The first thing you need to know is that every state has different foreclosure laws. There is not one universal law that governs all states. What this means is that you need to research the laws for your state to figure out what they are. Because whatever those laws are, that is what governs your foreclosure rights.

A good place to start looking to find out what your foreclosure rights are is the website for your state. Doing a search for foreclosure should point you in the right direction. That should at least give you some information and hopefully a phone number to call. I know that in Colorado, there is a free foreclosure hotline that offers free assistance. Because of the current foreclosure crisis in the U.S., many states are now offering all kinds of different free assistance to homeowners to help them understand their foreclosure rights and stop the foreclosure of their homes.

Another good place to look to understand your foreclosure rights is an attorney. I know that it can be difficult or even impossible to afford an attorney when you are facing foreclosure but there are resources out there that can help. If your income is low enough, you might be able to qualify for free help from an attorney or you may be able to find an attorney that would take on your situation pro bono (for free). You will never find out unless you do a little digging and unless you ask an attorney if they are willing to help you.

Doing some research on the internet can also help you understand your foreclosure rights. Sit down with the documents that your mortgage company’s lawyers have sent you and look up every word or phrase that you do not understand. That is what I did and it helped me get a better idea of what I was dealing with. My one warning here is that be careful who you listen to. There are plenty of people out there who try to take advantage of people who are in the middle of foreclosure. Look at more than one website to get your information. It gives you different perspectives as well as giving you a better idea of whether or not it is actually credible, good information.

By: Jill B

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Stop Foreclosure Using The Law

Here’s an idea some people have never thought about.

In some cases, you can use the law to help you stop your mortgage foreclosure; but you need to know what your options are and what you are looking for.

Your best bet is to contact a real estate attorney to look at the foreclosure documents you received from your lender; as well as the loan origination documents that you signed at closing for any mistakes.

The Truth in Lending Act may be the perfect ally for you to stop mortgage foreclosure if you want to call into question the validity of your mortgage loan.

If you want to go this route, you will need to prove that your originating loan documents were wrong. The area where this really comes into play is if your mortgage company made any mistakes in disclosing vital financial information required by law in your loan documents.

If this is the case, it is possible that your loan itself could be canceled. Here is where it is very important to have an attorney who is familiar with Regulation Z in the Truth in Lending Act.

Common mistakes in the Regulation Z of the Truth in Lending Act that could help you stop mortgage foreclosure that you might want to have your attorney look at on your loan documents include….

– Your mortgage company having more money in your escrow account than they are allowed.
– Not adjusting your ARM (adjustable rate mortgage) correctly.
– Not including referral fees to the originator of the mortgage.
– Not including information in the documents that describes how you can eliminate your private mortgage insurance.

If you are going to try to use the Truth in Lending Act to stop your foreclosure, you are going to need to make sure that your attorney goes through all of your loan origination documents with a fine-tooth comb.

Any errors, mistakes, or discrepancies could mean the difference between being able to stop foreclosure and losing your home.

Some other legal recourses that you may have available to you to stop your foreclosure include…

– If you can prove that your mortgage company lost any of your payments
– If you have an FHA-insured loan, you should have received information about preforeclosure counseling. This is required by law for FHA-insured loans.
– If your mortgage company accepted payment from you after foreclosure was filed on the home.

If you are looking for ways that will help you stop foreclosure, some of these legal avenues may be a viable option for you. Take the time and get a little more information on them to see if they can help you stop foreclosure.

By: Robert Spencer

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This is a complex question and the answer will vary depending on your specific situation. I cannot stress enough, the importance of seeking a qualified consumer attorney familiar with the applicable laws in this area. The wrong advice could cost you thousands of dollars!

Short Sale: A short sale is the process of selling a piece of real property for less than what is owed on the loan(s). Short sales require the approval of the lender who will be affected by the sale, because the funds received will be’short’ of what is owed to the lender. For example, consider a person who has real property worth $500k, with a first mortgage of $400k and a second mortgage of $200k. In this case, the second mortgage holder would have to approve the short sale and agree to accept less than the full balance owed on the loan. Even if the lender agrees to accept this arrangement, the borrower is not entirely off the hook just yet. A short sale by definition is an agreement to sell property for less than what is owed. If the lender agrees to accept a short sale, they are most often agreeing to forgive the remaining debt that is owed so there is no deficiency balance the borrower can be sued for (Read the agreement very carefully. Some lenders may try to hold you responsible for any deficiency balance as an unsecured creditor.) However, the forgiveness of debt is a taxable event that can trigger a 1099-C by the lender requiring the borrower to pay income taxes on the amount of debt forgiven. With the drastic decrease in home values over the last several years, the tax liability on forgiven debt can be thousands of dollars in this scenario! There may be exceptions to this general rule under State and Federal law and consumers are strongly encouraged to discuss their potential applicability with an accountant before moving forward with this option.

Foreclosure: Foreclosure is the process of taking back property, generally pursuant to a deed of trust or other security interest. California is a non-judicial foreclosure state, meaning the lender does not need to get the court system involved in the process in order to recover the property. Judicial foreclosure is an available remedy in California, however it is the rare instance that it is pursued. Borrowers who are contemplating letting their home foreclose need to be aware of exactly what that decision means to them.

Purchase Money Rule- This statute prevents a judgment from being entered against you for any deficiency balance resulting from a foreclosure assuming the following is true:

1) The lender(s) loaned you 100% of the money to purchase the property. (Includes 80/20 loans on 100% financed property).

2) Upon the original purchase, you occupied the home as your primary residence.

3) The loan(s) have not been refinanced, or purchase money HELOC’s have not been paid down and borrowed against.

One Action Rule- Lenders in California are allowed to take but one action against you, either a non-judicial foreclosure (ie. take back the property) or a judicial foreclosure (ie. sue you on the contract/loan.) Because of the uncertainty and costs associated with judicial foreclosures, they rarely take place. The One Action Rule may not apply to a sold out junior lienholder who has not had the option to take their ‘One Action.’ Subject to the Purchase Money Rule above, junior lienholders may have recourse against borrowers in this instance.

Forgiveness of Debt Rule- California and the IRS tax you for the amount of forgiven debt in any given year. Debt is forgiven when the lender gives up all rights to collect the debt or are otherwise leally barred from collection.

Insolvency Exception- California and the IRS both exclude forgiven debt as taxable income, but only to the extent you are insolvent. The insolvency test is met when your debts exceed your assets, and assets include all real and personal property including retirement accounts.

Bankruptcy: For those individuals who have refinanced their original loans, taken out equity lines, or in addition have other significant debts they want to eliminate, bankruptcy may be the choice for them. In this instance, bankruptcy would discharge any money owed to the lender for a deficiency balance and also prevents the lender from suing to collect it. Moreover, bankruptcy would wipe out any tax implications that would normally result from a short sale or foreclosure.

The bottom line here is to do your homework and get competent advice before choosing the course of action that best suits you.

For more information regarding short sales, forecloses, or for any other bankruptcy law questions, contact The Larkin Law Firm at http://www.live-debt-free-now.com

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How To Use The Law To Help You Stop Mortgage Foreclosure

You can use the law to help you stop mortgage foreclosure on your home but you need to know what your options are and what you are looking for. Your best bet is to hire a real estate attorney to look at the foreclosure documents you received as well as your loan origination documents for any mistakes.

The Truth in Lending Act may be the perfect ally for you to stop mortgage foreclosure if you want to call into question the validity of your mortgage loan. If you want to go this route, you will need to prove that your originating loan documents were wrong. The area where this really comes into play is if your mortgage company made any mistakes in disclosing vital financial pieces of information. If this is the case, it is possible that your loan itself could be canceled. Here is where it is very important to have an attorney who is familiar with Regulation Z (has many of the detailed requirements of the Truth in Lending Act).

Some truth in lending areas that could help you stop mortgage foreclosure that you might want to have your attorney verify on your loan:
– Your mortgage company having more money in your escrow account than they are allowed.
– Not putting information in the documents that describes how you can get rid of your private mortgage insurance.
– Not adjusting your ARM (adjustable rate mortgage) correctly.
– Not including referral fees to the originator of the mortgage.

If you are going to try to use the Truth in Lending Act to stop mortgage foreclosure, you are going to need to make sure that your attorney goes through all of your loan origination documents with a fine-tooth comb. Any errors, mistakes or discrepancies could mean the difference between being able to stop mortgage foreclosure and losing your home.

Some other legal avenues that you may have available to you to stop mortgage foreclosure are:
– If you can prove that your mortgage company lost any of your payments. Having clear and detailed records on this will be your best defense.
– If you have an FHA-insured loan, you should have received information about preforeclosure counseling. This is required by law for FHA-insured loans.
– If your mortgage company accepted payment from you after foreclosure was filed on the home.

By: Jill B

Article Directory: http://www.articledashboard.com

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