Foreclosure Defenses for Homeowners

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When someone has defaulted on a loan for their property, the lender may take steps to foreclose on the property and to sell it at auction to the highest bidder. However, there may be certain defenses that the homeowner can raise to defend against foreclosure. It is important that he or she understands the process of foreclosure and these possible arguments.

Process of Foreclosure

Real estate transactions are largely governed by state law. The process involved in foreclosure may vary from state to state. However, there are often similar processes across state lines. Well before foreclosure is ever considered, the lender may send the homeowner a notice letter stating that he or she is in default on the loan. The notice may indicate how much the borrower owes and may include a date by which the past balance must be repaid to avoid the lender taking steps to advance the foreclosure process. This notice may include language about “curing” or “restating” the mortgage. This letter may be followed by a letter from a lawyer that states he or she has been retained to assist with the foreclosure process, again possibly providing the amount of the past due balance and information about the right to cure.

Legal documents may be served on the homeowner notifying him or her of a Complaint filed in court or of the intent of the lender to sell the property. These legal documents must be served on the homeowner within a certain timeframe provided by state law. There may then be an auction sale in which the home is sold to the highest bidder, which is often the bank.

Loan Modification

A mortgage company has to determine if a homeowner qualifies for a loan modification prior to foreclosing on the home. It must inform the homeowner in writing of any available loan modification or other option that may help the homeowner retain the home. If there is a pending loan modification application, it cannot foreclose on the property while this decision is being considered. If the foreclosure process has already commenced, it must stop while the loan modification or other option is pending. The homeowner may also have the right to appeal the decision if the loan modification is denied.

Right of Redemption

The homeowner may be able to redeem the sale by paying all or a portion of the mortgage within a specified period of time.

Improper Service

The party wanting to foreclose the property is responsible for drafting a Complaint and Summons to the party responsible for the debt. The Complaint establishes the legal basis for the action. The Summons notifies the debtor that there is a pending lawsuit against him or her and states the time limit that he or she has a duty to respond. It may also indicate a court date. These documents must be legally served on the debtor. If the moving party does not properly serve the debtor, the case can be dismissed for lack of jurisdiction or improper service. The defendant’s right to the property may not be impacted by the lawsuit.

If the defendant is not served, a challenge to the service of process may occur. Some cases may be successful with this argument in some states after the foreclosure and after the sale. Without proper service, the court lacks the power to foreclose and the power to affect that particular defendant’s rights to the property.

If a defendant is not served with the documentation and did not waive his or her right to service, it is important to discuss these facts with an experienced real estate lawyer.

Lack of Standing

In some situations, mortgage companies may sell the loans to others. This defense may be used if the defendant believes that the plaintiff is not the legal owner of the mortgage.

Lack of Notice

State law dictates what type of notice must be provided to homeowners facing foreclosure. State law may dictate that certain forms are sent to homeowners, that multiple copies are sent or that specific provisions are included in notice documents. Such technicalities as the plaintiff not including provisions in bold or on colored paper may justify a court finding that the notice requirements were not strictly followed.

Other Defenses

There may be other valid defenses that a real estate lawyer can help assert based on the specific circumstances of the case, such as challenging the mortgage terms or how the mortgage was secured.


Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.

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