Between 2007 and 2014 the homes of around 4.2 million homeowners in the U.S. were foreclosed. Foreclosure, as defined by the U.S. Department of Housing and Urban Development, is a legal process wherein a creditor or mortgage lender, usually a bank, puts up for sale a loan collateral, like a house, to enable it to recover unpaid mortgages from a borrower. The process that leads to foreclosure usually starts after two to three successive months of delinquency in mortgage payment.
Foreclosure is either judicial and non-judicial. In judicial foreclosure, a mortgagee or creditor is required to file a case in court to start a foreclosure proceeding on a debtor’s property. The many months it will take for this procedure to be completed, however, will somehow works in a debtor’s favor as this will give him/her the chance to raise a legal defense which can save his/her property. There are a number of foreclosure defenses that have been resorted to in the past which have helped homeowners to save their property.
- Servicemember on active duty. If your creditor filed a case in court to start foreclosure on your property, you are allowed to write the court to request for a postponement of the foreclosure proceeding. Protection against mortgage foreclosure is just one of the many types of protection provided by the Servicemembers Civil Relief Act (SCRA), formerly called the Soldiers’ and Sailors’ Civil Relief Act (SSCRA), for members of the military entering active duty.
- Unconscionable (unacceptable) mortgage term. This happens when a creditor takes advantage of, misguides or deceives a borrower by designing a mortgage loan contract that is actually intended to make mortgage payment impossible, giving it the opportunity to seize and foreclose upon your property.
- State procedures were not observed by foreclosing party. In a foreclosure procedure there are steps that the foreclosing party needs to observe, such as serving the loaner a notice of default and giving the borrower 30 days to make a payment after the notice of default has been issued. Failure to observe any of the steps required in the foreclosure procedure gives the loaned the legal right to defending against such foreclosure.
- Foreclosing party cannot prove ownership of mortgage. There are times when the foreclosing party is not able to present ownership of mortgage. This is a common case wherein a mortgage contract has been purchased by different companies, so that ownership of the contract has passed from one owner to another.
- Mistakes committed by the Mortgage Servicer. There have been times when a case (that will start foreclosure proceedings) was filed in court by a lender, only to find out that the bases for the foreclosure were actually mistakes committed by the mortgage servicer. These mistakes include:
- error of crediting mortgage payment under another loaner’s name;
- imposing very high fees or collecting fees not approved by you or by the creditor; and,
- declaring a mortgage amount that is much higher than what you really are supposed to pay.
As explained in the website of the Bradford Law Offices, PLLC, depending on the exact nature of your situation and your own personal preferences, a number of different options for fighting Chapter 7 bankruptcy are available. These include the following:
- Mortgage modification
- Negotiating with lenders
- Truth in Lending Act violation claims
- Pursuing bankruptcy protection