7 Defense Strategies To Fight Wrongful Foreclosure
Facing foreclosure feels overwhelming and frightening. Your home is at stake, along with your credit rating and financial stability. While lenders have the right to foreclose when borrowers default on mortgage obligations, they must follow proper procedures and comply with all legal requirements. Many foreclosures proceed based on incomplete documentation, procedural violations, or outright fraud that gives homeowners valid defenses.
Our friends at Leinart Law Firm emphasize that homeowners have rights during the foreclosure process and that lenders must meet strict legal standards before taking your property. When you’re facing foreclosure proceedings, a mortgage lawyer can examine your loan documents, identify procedural defects, and build defenses that may stop the foreclosure or provide you with better alternatives than losing your home.
Challenging Standing To Foreclose
Lenders must prove they have legal standing to foreclose on your property. This means demonstrating they actually own your mortgage and have the right to enforce it. Many mortgages are sold multiple times, bundled into securities, and transferred between servicers in ways that create documentation gaps.
If the foreclosing party cannot produce the original promissory note with proper endorsements showing the chain of ownership, they may lack standing to proceed. Some lenders have foreclosed using fabricated documents or robo-signed assignments that courts have rejected as fraudulent.
We examine the mortgage assignment chain carefully, request production of original documents, and challenge foreclosures when lenders cannot prove they own your loan. Successful standing challenges can result in foreclosure dismissal and significant leverage in loan modification negotiations.
Identifying Loan Servicing Violations
Mortgage servicers must comply with federal and state servicing laws that protect homeowners. Common violations include:
- Failing to properly credit your payments
- Charging unauthorized fees
- Force-placing unnecessary insurance
- Ignoring loss mitigation applications
- Failing to provide required notices
- Dual tracking (pursuing foreclosure while reviewing modification applications)
- Misapplying payments to fees instead of principal and interest
The Real Estate Settlement Procedures Act and state laws provide remedies when servicers violate these requirements. Documented servicing errors can stop foreclosure proceedings and create claims for damages against the servicer.
Examining Predatory Lending Practices
Loans originated through predatory lending practices may be subject to rescission or other remedies that prevent foreclosure. Predatory lending includes practices like inflated appraisals, steering borrowers into unsuitable loan products, failing to verify income adequately, or including abusive terms in loan agreements.
Truth in Lending Act violations give borrowers extended rescission rights for certain loan defects. State laws against unfair and deceptive practices may also apply to predatory lending situations. These claims can provide defenses to foreclosure while creating counterclaims against lenders.
Disputing Payment History And Default Claims
Sometimes foreclosures proceed based on incorrect default claims. Lenders allege you missed payments that you actually made, or they misapply payments in ways that create artificial defaults. Payment disputes require careful review of your records against the servicer’s accounting.
We compare your payment receipts, bank records, and correspondence with the servicer’s payment history. Discrepancies often reveal that you’re not actually in default or that the default amount is much smaller than claimed. Correcting these errors can eliminate the basis for foreclosure entirely.
Asserting Statute Of Limitations Defenses
Foreclosure actions must be filed within statute of limitations periods that vary by state. For judicial foreclosures, these periods typically range from three to six years from the date of default. Some states apply different limitation periods depending on whether the lender previously accelerated the entire loan balance.
Lenders who wait too long to foreclose may find their claims time-barred. This defense is particularly relevant in states where foreclosure backlogs created delays or when lenders withdrew previous foreclosure actions and later tried to refile.
Negotiating Loan Modifications And Alternatives
Fighting foreclosure doesn’t always mean trying to stay in your home indefinitely. Sometimes the best outcome is a loan modification that makes payments affordable, a short sale that avoids deficiency judgments, or a deed in lieu of foreclosure with favorable terms.
We negotiate with lenders from a position of strength when we’ve identified legitimate defenses to foreclosure. Lenders become more willing to offer reasonable modifications or alternatives when they face expensive litigation over procedural defects or standing issues.
Federal programs like the Home Affordable Modification Program and successor initiatives provide frameworks for modifications. State laws may also require lenders to consider alternatives before foreclosing.
Bankruptcy As A Foreclosure Defense Strategy
Bankruptcy filing automatically stays foreclosure proceedings through the automatic stay provision. Chapter 13 bankruptcy allows you to cure mortgage arrears over three to five years while keeping your home. Chapter 7 can eliminate other debts, freeing up money to catch up on mortgage payments.
While bankruptcy affects credit, it may be less damaging than foreclosure and provides more control over the outcome. We coordinate with bankruptcy counsel when this strategy serves your interests.
Protecting Your Home And Rights
Foreclosure defense requires immediate action and thorough investigation of your loan, servicing history, and the foreclosing party’s documentation. Valid defenses exist in many cases, and even when defenses don’t stop foreclosure entirely, they provide leverage for better outcomes. If you’re facing foreclosure, contact us to review your situation and discuss strategies for protecting your home and your rights.