Do Not Just Accept an Unfair Foreclosure – You Can Challenge It in Court and Win
Up until five years ago, challenging a foreclosure in court was a difficult proposition and only rarely pulled off successfully. The situation couldn’t be more different now. The media have reported constantly for years on how the mortgage lenders have exploited their authority and used predatory practices to throw people out of their homes.
The good work done by consumer rights activists and by the media has paid off. When homeowners challenge their foreclosures now, the legal system looks upon their applications with sympathy.
If you are a homeowner who needs to fight a foreclosure in court, this is how you raise a defense.
Going before a judge
In one out of two states in the US, foreclosures are primarily dealt with in a court of law. You don’t need to file a case to challenge a foreclosure in these states – the challenge is implicit, as the proceedings are in the form of a court hearing. In states where foreclosures are non-judicial, though, you do need to take the trouble to file a case.
Once your case goes before a judge, you need to have a defense ready.
The most common ways to challenge a foreclosure
1. Sometimes, mortgage lenders will try to ram a mortgage agreement with harsh terms down a home buyer’s throat by using unfair methods. Presenting to the judge that the terms of your agreement are one-sided enough to be “unconscionable” is one way to question the validity of the agreement and the foreclosure based on it.
2. If you are an active member of the Armed Forces, the Service members Civil Relief Act offers protection to you as a homeowner. Under this law, every person serving in the Armed Forces has an automatic right to a judicial foreclosure. The law also allows every service member to request that his foreclosure be delayed by nine months if he needs the time.
3. The newspapers often report these days on how mortgage lenders cut procedural corners while trying to foreclose on people’s homes. Procedural irregularities are easy to challenge. If the irregularity you bring up is of the nature that it denies you an important right and causes you harm, the judge will easily order the lender to withdraw the foreclosure proceedings and start over.
4. You often hear about how debt collectors will pursue random people for loans they never had anything to do with. Mortgage lenders often do something similar – they try to foreclose on homes even when they haven’t any proof that they hold the titles. Mortgage lenders often swap and sell the mortgage contracts they hold to other business entities. These exchanges and trades can happen so many times over the course of a few years that the paper trail is deep, confusing and ill-defined by the time mortgage ownership gets to the final holder. The most recent holders usually have no way to prove to a court that they do actually hold the title. If you can prove that the opposing party doesn’t have ironclad proof of ownership, you could have the case thrown out.
5. Mortgage lenders have so much to do just selling mortgages that usually they don’t have any time left to actually service them – receiving monthly payments, keeping track of them and enforcing the terms of each contract. They farm this work out to businesses known as mortgage servicers. Unfortunately, these businesses are hardly sincere about doing an honest job. They often make serious mistakes. They will receive your monthly mortgage payment but credit it to a different borrower. When you fail to make a payment they will impose penalties that are far higher than what the contract allows. When they try to foreclose on a borrower they will often demand far more money than the contract sets out. You need to be able to find one of these mistakes and show the judge that you’ve been wronged. This will bring you immediate relief.
6. Mortgage lenders have this nasty habit of putting together mortgage contracts that are unclear about the terms of the contract. For instance, many contracts are worded so as to not provide complete information about the APR the borrower pays, the amount of money lent or the payment schedule. The Home Ownership and Equity Protection Act and the Truth in Lending Act were formulated to protect the consumer against exactly this kind of behavior. You could take advantage of the protections offered by these laws to get out of the foreclosure action brought on you.
When the housing crisis erupted back in the year 2007, receiving a foreclosure notice was a shock to anyone and a source of great embarrassment. The tide began to turn as information began to get out that many of these foreclosures were unfair and illegal. Today, being foreclosed upon isn’t the hopeless experience that it once used to be. Challenging a foreclosure is far simpler.
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