Mortgage Foreclosure Defense Fraud

The federal moratorium on federally supported loan foreclosures expired on July 31, 2021. With so much ambiguity surrounding the coronavirus and its variations, homeowners who fall behind on their mortgage payments may find themselves in difficult situations.

Historically, the legal process of foreclosure has favored banks and lenders, requiring a homeowner to return their home to a lender after defaulting on a mortgage. Despite the federal government’s efforts to keep people in their homes during the COVID-19 epidemic, more than 214,000 foreclosure lawsuits were filed in the United States in 2020. Homeowners have begun fighting back by delaying or terminating foreclosure procedures. Foreclosure defense is the legal technique utilized by these homeowners.

The purpose of a foreclosure defense strategy is to show that the bank has no legal right to foreclose on your home. The capacity of an attorney to dispute how the mortgage business operates can make or break a case. The technique exploits loopholes in the system and assumes that lenders are acting illegally or unethically.

Homeowner victories in state and federal courts have changed the foreclosure picture, giving other homeowners hope. Because several of America’s large banks have recognized unorthodox, unaccepted, or even unlawful procedures in mortgages, loan modifications, and foreclosures, they inadvertently have given homeowners extra grounds to oppose a file.

Modifications to Mortgage Loans

Modifying your mortgage is the most straightforward and practical approach to avoid foreclosure. A loan modification is a term for this procedure, and it’s as tempting as it sounds. This crucial and relatively simple strategy can help you solve a complex problem. In a loan modification, the homeowner persuades the lender to revise the loan conditions to reduce the monthly payments. The following items may be included in a mortgage modification:

• A decrease in the interest rate or a change in the interest rate.
• The principal is being reduced.
• Late fees and penalties for non-payment are reduced or eliminated.
• A decrease in the monthly payment.
• To temporarily halt payments or extend the time for making payments, forbearance is used.

For both lenders and borrowers, loan modification is the most favored technique of dealing with foreclosure.

The homeowner can make payments, and the bank can reclaim at least a portion of the loan. The bank prefers that the loan be kept active to ensure regular payments while the homeowner benefits from relief from mounting debt. This is the wisest and best course of action to take, but be sure that all payments are made in full and on time once a modification is agreed upon.

State-by-State Foreclosure Defense

Understanding your state’s foreclosure policies and legislation is essential to determining the best option for foreclosure defense. State laws may differ.

Alaska and Kansas allow homeowners to apply for loss mitigation, pay off their mortgage to avoid foreclosure, and keep any proceeds following a sale. Florida allows you to catch up on your payments and avoid foreclosure. Many states provide homeowners with the same or similar rights. It’s critical to understand your state’s homeowner rights. If a bank or lender fails to follow state laws and procedures when pursuing an action, the foreclosure may be challenged. An attorney or credit counselor could ensure that everything is in order.

The biggest variation in state laws is whether you buy your house with a mortgage or a deed of trust. These are simply legal documents that transfer property ownership to the new owner.

If you signed a mortgage, you probably live in a state that uses judicial foreclosures, which means a lender must file a lawsuit in court to obtain a judgment to foreclose. If you signed a deed of trust, you live in a state where non-judicial foreclosures are allowed, which means a lender does not need to go to court to start a foreclosure process.

In a judicial state, homeowners have an advantage since they can demand that the lender present proof and perfection of a claim (a legal word meaning all of the relevant facts). The lender does not have to prove anything in a non-judicial jurisdiction because the state’s civil code gives it the authority to foreclose after giving a notice of default. In non-judicial states, a homeowner must bring a civil action to compel the lender to furnish proof of claim.

Whether you signed a mortgage or a deed of trust, you also signed a promissory note, which is a pledge to repay a particular loan over a specific period.

The note is delivered to the lender and is recorded as an asset on the lender’s books for the amount of the promised repayment. According to state law, the mortgage or deed of trust is a public document that must be recorded in a county or town office. When a promissory note is assigned sold to another party, the note must be endorsed with the new owner’s name. A deed of trust or mortgage must be filed in the town or county records office when assigned to another entity.

A primary foreclosure defense approach is making a bank prove transparent chains of title for a mortgage and a promissory note. If any link in either chain is suspect, a lender’s ability to lodge a valid claim on a property is jeopardized.

Foreclosure Defense and Title Chain

Here’s where a foreclosure defense lawyer can start eroding a bank’s claim on your home. A mortgage, deed of trust, or promissory note must have what is known as “perfection” of the chain of title to be legitimate. In other words, from the time you signed your papers at closing until now, there must be a clear, unambiguous record of ownership. Any break in the chain of title renders the instrument “defective,” rendering it invalid.

In reality, slips happen all the time. As mortgages and deeds became more common, the sheer volume of transactions made it difficult, expensive, and time-consuming for institutions to record each one at a county records office. The banks, however, developed the Mortgage Electronic Registration System (MERS). This privately held firm tracks the servicing rights and ownership of the nation’s mortgages to have some method of record-keeping. The MERS database contains around 66 million mortgages in the United States.