The prospect of losing your home is terrifying and stressful. It may be too overwhelming for you to handle the situation alone. Hence, if you are facing foreclosure, it’s best to seek the assistance of legal experts at the earliest. These professionals will help you find the best strategies to navigate the situation and will do their best to help you retain possession of the property. Here are a few legal defenses you may employ when facing foreclosure.
Defenses to Use in a Foreclosure Situation
Produce the Note
The “Produce the Note” defense is a generic legal argument used frequently to defend against foreclosure. It relates to the promissory note’s endorsement. When a borrower wants a home loan, they must sign both the mortgage agreement and the promissory note.
The promissory note represents the borrower’s genuine pledge to repay the mortgage debt. This makes the note owner the only entity with the authority to make good on its promise and collect the debt.
The bank may have transferred some of these mortgages to other banks. A property owner may use the “Produce the Note” argument to ask the bank to show that it owns the original promissory note and has the right to foreclose on the subject property. You may be able to put the foreclosure process on hold if the bank or other foreclosing party can’t prove it owns the loan.
Checking if the Terms Are Unfair
A property owner may be able to defend themselves against foreclosure by challenging the provisions of the mortgage agreement in court. A lawsuit of this nature asserts that the mortgage contract conditions are unfair or unjust.
A borrower or property owner has the right to examine the full terms of the loan. This calls for more than simply a lopsided agreement and a slight injustice. The arrangement must be so glaringly unfair that it is appalling to the judge and makes it evident that the information is incorrect.
Provisions in the State Law
The steps lenders can take to foreclose on a property legally are laid forth in state law. It might be mandatory to provide notice to the borrower and allow the borrower to resolve the problem, if possible. Mortgage agreements must be documented with the county recorder’s office to be enforceable in several states. Therefore, the court may put the process on hold if the lender did not properly register the documents.
Under certain conditions, service members on active duty may be eligible for foreclosure relief under the Servicemembers Civil Relief Act (SCRA). Servicemen may be able to at least delay foreclosure with the help of the SCRA. This would give them time to catch up on pending mortgage payments.
It would be advisable to check the state legislation for programs to aid people facing foreclosure. These programs provide funding to qualified borrowers to assist them in resolving their debt and getting back on their feet. Programs like the Making Home Affordable program offer help and other benefits, like free counseling to the borrower. Additionally, your state’s housing agency may offer foreclosure assistance programs. However, it’s also essential to watch out for “foreclosure scams.”
Filing for Bankruptcy
Debtors often turn to bankruptcy when facing foreclosure. A bankruptcy filing under Chapter 7 or Chapter 13 triggers an automatic stay. This would put a bar on any foreclosure proceedings and any debt collection efforts by the creditors. This strategy is beneficial in situations where the foreclosure sale has not happened. It’s vital to note that the debtor will not be able to use this strategy if one or more bankruptcy cases filed by the same debtor were dismissed in the past year.
Raising a Defense for Foreclosure
You have the option to raise a defense in front of the judge if you face foreclosure. The foreclosure process will vary based on whether it is judicial or non-judicial. A judicial foreclosure sale might be pursued through a state court filing. The property owner must ask a judge to approve the defense.
To accomplish this, you can either file a lawsuit or a counterclaim. The owner could allege that the foreclosure process is erroneous for the stated reason. Additionally, the property owner can ask the same court to impose a stay to halt the foreclosure process.
For instance, if the foreclosing party failed to follow the required state procedures, you could file a procedural defense. Similarly, if you have already modified the loan or there is an incorrect record stating that you missed a payment, you can raise a substantive defense. Further, if you’ve taken a loan from the USDA, the VA, or the FHA, you can check if there are any specific legal violations.
The foreclosure procedure might not start if the mortgage lender makes a mistake with the loan account. The error could be in the documentation or other factors like insurance or overpayments. The business will first need to identify the flaw and begin remedying it.
Extortion, harmful actions to the owner, overstating what the individual must pay, and credits for payments going to the incorrect party can all be considered significant errors with the mortgage firm. When the lender commits these errors, the foreclosure process typically stops. All parties involved may assess the integrity of the legal defense. The court will later decide whether foreclosure is the appropriate action against the homeowner.
Get in touch with the Vilt Law, P.C. team if you face foreclosure and need legal assistance. Our team has extensive experience helping people facing foreclosures or whose homes were already sold in a foreclosure sale. We may be able to help you by taking immediate action. Get in touch with us through our website or call us at (713) 840-7570.