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Disputing A Mortgage With A Qualified Written Request

As mentioned in a previous article, it can be very difficult for homeowners facing foreclosure to raise certain claims in court when the bank holding their loan has failed and been taken over by the Federal Deposit Insurance Corporation. Case law and federal statute give the FDIC broad immunity against a number of claims that could be raised by borrowers in regards to loans held by the failed institution.

However, there are also a number of exemptions to the broad immunity the FDIC enjoys. Four of them are significant and worth examining here, as homeowners in foreclosure may be able to use them to bring claims against the FDIC or successor financial institutions.

The first is called fraud in the factum, and refers to any case when one party to a transaction reasonably relies on a misrepresentation by another party. The misrepresentation will be as to the character or essential terms of the contract. Examples include alteration of a document or forgery. The FDIC nor its successor institutions are immune to claims of fraud in the factum, so homeowners may be able to bring these issues into court.

Second, Truth in Lending rescission claims are still allowed despite the FDIC’s immunity protection. In fact, the Truth in Lending Act states that a borrower’s rescission rights continue regardless of assignment of the loan or to whom the loan is assigned. This means that, even if the lender fails and the note is taken over by the government, rescission may still be an option if the other requirements under the statute are met. FDIC receivership of the bank’s assets will not affect the claim.

Also, the FDIC does not have immunity protection from any transaction that is void. The federal statute granting FDIC immunity is intended to protect the government’s interests in assets is acquires from the failed banks. A void transaction, though, does not create an interest in an asset, and the immunity protection cannot be extended to assets in which the FDIC has no valid interest. In cases such as fraud in the factum, the transaction may be declared void, for instance.

Finally, there is a rule called the FTC Holder Rule that was designed to protect credit consumers from holder-in-due-course immunity, such as the FDIC has been granted. For this rule to apply, though, an FTC Holder Notice must be included in the consumer credit contract. It will be included in many transactions relating to a sales transaction. This might be a home improvement contract or other similar agreement. If the notice is included in the contract, the FDIC’s immunity may not apply.

While the above defenses to broad FDIC immunity have survived most course, other claims have survived in a smaller number of cases. These include such issues as breach of contract, failure of consideration, challenges to the validity of a lien, homestead issues, unreasonable foreclosure sale, and state statutes regarding Unfair and Deceptive Acts and Practices. Homeowners should do their own legal research to determine if their claims may survive, or consult with a competent foreclosure attorney.

When homeowners find that they have become a mortgage customer of the government, falling into foreclosure can become extremely complicated. While the FDIC has taken some steps to assist borrowers in stopping foreclosure, the agency is granted broad immunity from many claims that may have been used to defend against the loss of the home in the first place. Thus, borrowers should educate themselves in regard to the issues surrounding the FDIC’s administration of mortgage loans and foreclosure.

By: Nick Adama

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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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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

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