Losing your home to foreclosure can be absolutely devastating, both emotionally and financially. You can fight back the foreclosure, especially if you suspect the banks violated the law during the foreclosure process. Various rules govern the foreclosure process and rights that protect you as the homeowner. Here is everything you need to know about foreclosure defense.
Defending Your Home Foreclosure
It’s possible to lose your home if you fall behind on payments. However, banks can make mistakes or use improper and unethical methods to take away your home. If you fall behind on your mortgage payments, there are various ways you can use to protect your home from foreclosure.
First, you can try to negotiate with your mortgage company for a loan modification. This may include extensions on payment deadlines, reduction of monthly payments, accumulated fees and penalties, or lowered interest rate and principal reduction.
Negotiating for a loan modification can help you catch up financially and avoid losing your property. Other ways include a short sale where the house is sold for less than your outstanding amount or transferring ownership to the bank.
Types of Foreclosure
There are two ways in which banks use foreclosure actions, including judicial and non-judicial foreclosure. In judicial foreclosure, banks file lawsuits against homeowners through a civil court to process residential foreclosure. It allows a homeowner to make a defense without filing a lawsuit against the lender.
In a non-judicial foreclosure, the banks the promissory note and Deed of Trust signed during the loan closing process for foreclosure outside the court system. The bank uses a series of notifications, and the only way a homeowner can defend themselves is by filing against the bank.
Justification
You can hire a foreclosure attorney to challenge the foreclosure in court. Here, you cannot use financial hardships for defense but rather evidence that your rights were violated during the foreclosure process. Here are some of the most common defenses a lawyer may present to the court to delay or stop the foreclosure process.
The Foreclosing Bank Didn’t Follow State Procedures
The rules for foreclosure vary from state to state. You can come up with a defense if the foreclosing bank fails to follow state foreclosure action. The court issues an order for the bank to start over if your challenge is successful. Only serious mistakes will grant a successful ruling from the court, while minor errors are overlooked.
Foreclosing Bank Lacks Standing
The foreclosure process can only be initiated by the loan holder or someone acting on their behalf. If the foreclosing party fails to prove it owns the loan, it lacks standing and cannot foreclose. Banks usually prove loan ownership by producing a promissory note.
If the bank cannot produce the document, then your defense has a chance of winning.
The banks can also miss an assignment or the endorsement even with the promissory note, making the defense more challenging. Banks are careful with paperwork making it challenging to use any errors for the defense.
Major Mistakes
There are certain rules and regulations that govern the foreclosure process. If there is any breach of these rules or serious errors were made in facts or meaning, you can challenge the foreclosure. Some of the errors include excessive fees imposed or not authorized by mortgage contracts.
You can also credit payments to the wrong party, meaning you were not behind on the fees. The bank can pursue foreclosure while a loan modification is pending, which violates state or federal law.
You can make a strong foreclosure defense case if the bank overstates the amount payable to reinstate your mortgage. You can argue the bank took away available remedy to keep your home.
Judicial Foreclosure Affidavits
The foreclosing party is usually required to sign a written statement under oath called an affidavit in a judicial foreclosure. The affidavit contains information like the loan’s principal balance, interest owed, and no. of months the homeowner is behind on payment and the fees and cost of the foreclosure.
All the information should be accurate, honest, and supported by file documentation. If any part of the affidavit is false or there is no adequate file documentation, you can contest the foreclosure.
You can raise a defense to foreclosure by hiring an attorney, especially in a judicial foreclosure. Legal counsel will help you explore all possible options to avoid foreclosure.
