If you are currently in default on your mortgage loan and feel that foreclosure proceedings are unjustified, you may want to know what you can do to stop the foreclosure. Is it possible that you may be a victim of mortgage fraud? See my post Are You a Victim of Mortgage Fraud?
The first step you should take is to contact your lender in writing and explain what you believe may be the mistake. Your reason should be fully and clearly explained and provide documentation that will validate your belief.
If your lender does not agree, you have the right to file a complaint in court and prove your case. Should you decide to take action, be sure to retain all of your documentation. Also, it may be necessary to consult with a foreclosure defense attorney to make court appearances.
There are basically two legitimate ways to defend yourself against a foreclosure.
- Technical defenses, and
- Substantive defenses
A technical defense is an argument that questions the handling of the foreclosure proceeding. Most foreclosure defense attorneys recommend that property owners be very careful in pursuing technical defenses because the lender/bank can easily correct the procedural defect. Therefore, it is not an effective defense in preventing foreclosure. However, if the arguments allege and document several violations of technical defenses, then it is possible that a lawsuit action could prevail.
Homeowners have been led to believe that a forensic loan audit that reviews all of the documents below will render some relief or even give them back their home. It does not. Supporting documents, your stories, receipts, and correspondence will give a more accurate accountability of what really happened. In addition, be mindful of the fact that most large lending institutions have highly sophisticated and savvy computerized document systems that, obviously, work to their benefit and for this reason it makes proving your case almost impossible.
I hope I’m not being too pessimistic, but I just want you to be well-prepared if you are filing a lawsuit. So, here’s one more point you need to know…the statute of limitations of most of the technical defenses are 1-3 years.
So with that said, allow me to share with you some of the technical defense violations that may support your case:
- RESPA Violations — The Real Estate Settlement Procedures Act violations could mean the homeowner was not given certain mortgage loan disclosures within a 3 day period upon origination of a loan application, kick-back fees to the broker,
- TILA Violations – The Truth in Lending Act violations contain any violation with regards to failing to disclose clear and accurate, finance charges, right of recission, amount financed, APR, amount and timely payments of the loan, etc.
- Violating HOEPA – Violating the Home Ownership and Equity Protection Act would include nondisclosure of mortgage broker fees, misdating the notice of right to cancel, HELOC disclosed as a closed-end loan, high rate, high fees loans banning balloon payments, negative amortization, pre-payment penalties, etc.
- FDCPA Violations – The Fair Debt Collections Protection Act prohibits lender/banks from harassing phone calls after hours or harassment of family members, friends, employers, friends, neighbors, sending letters, causing physical or emotional duress are subject to injunctive relief and
- Violating FCRA – The Fair Credit Reporting Act is a federal law that protects consumers/homeowners from reporting inaccurate and outdated negative mortgage information. Lenders will be liable for damages and attorney’s fees.
Substantive defenses are more reliable and specific arguments that can be used to stop a foreclosure. Fraud and misrepresentation are allegations that can be used for a substantive defense. When substantive defenses are used in court, they must be asserted in a timely manner according to court rules. Here are some example of substantive defenses:
- Predatory lending – When a lender makes a loan recognizing that a borrower has no capacity to make payments it is considered predatory lending. See my article post on How to Identify Predatory Lending Practices.
Predatory lending entails various forms of abusive tactics, such as duress, high costs and excessive fees, prepayment penalties, breach of contract, elder abuse, breach of fiduciary duty, etc,
- Unconscionability – The argument and defense of “unconscionability” is a principle that presents the terms and formation of your mortgage and the surrounding conditions are so inequitable and unfair that it “shocks the conscience of the judge.” See my post on Mortgage Loans that are Unconscionably Fraudulent.
I am presenting these defenses as arguments that you may have with your lender/mortgage servicer/bank. You may be a victim of mortgage fraud. In any event, hopefully this post will have given you some insight as to how you can protect your home. In the meantime, ask your legal question below:
Disclaimer: The author is not an attorney and is not rendering legal, financial, or other professional services. The information contained on this web site is the authors opinion based on her personal experience. If you need legal advice, consult a competent attorney.