Foreclosure Defense: Everything You Need to Know to Fight Back

 Posted on October 23, 2023 in Arlington Heights Bankruptcy Lawyer

The legal process of foreclosure has been historically inclined towards banks and lenders. This process demands homeowners to relinquish their homes to lenders upon defaulting on their mortgages. Despite the COVID-19 pandemic, with the government stepping in to retain homeownership, over 214,000 foreclosure lawsuits were filed in the US in 2020.

However, many homeowners now resist foreclosure by delaying or completely stopping the proceedings using a legal strategy called foreclosure defense.

What Is Foreclosure Defense?

The primary objective of foreclosure defense is to establish that the bank doesn't have the legal right to foreclose. The likelihood of success heavily depends on a lawyer's ability to question the mortgage industry's operation.

Foreclosure defense seeks to exploit flaws within the system, presuming illegal or unethical behavior from lenders. This legal strategy offers homeowners a fighting chance against powerful financial institutions.

Foreclosure Defense Varies by State

Understanding your state's specific regulations and laws is crucial in determining the most effective approach when it comes to foreclosure defense. As laws can vary greatly between states, being aware of your rights as a homeowner and the various foreclosure prevention methods available to you can make a significant difference.

In states like Alaska and Kansas, homeowners are granted the right to apply for loss mitigation, enabling them to pay off the loan to prevent a foreclosure sale. Additionally, they are entitled to any excess funds that may be generated from the sale.

On the other hand, Florida allows homeowners the opportunity to become current on their loan payments, thereby stopping a foreclosure sale in its tracks. Many states offer similar protections for homeowners, emphasizing the importance of being informed and proactive when faced with the possibility of foreclosure.

Challenging a foreclosure becomes a viable option if the bank or lender has failed to adhere to state laws and procedures when initiating the legal process. Seeking the guidance of an attorney or credit counselor can help ensure that all parties are acting in accordance with the law and reduce the likelihood of erroneous or illegal foreclosures.

Mortgage Loan Modifications

Foreclosure is a nightmare every homeowner wants to avoid, but did you know one simple and effective solution can help keep your home safe? That solution is mortgage loan modification. This hassle-free process prevents foreclosure and offers a mutually beneficial arrangement between the homeowner and the lender.

In this blog post, we'll walk you through the essentials of mortgage loan modifications and how they can work wonders for your current financial situation.

What Is a Mortgage Loan Modification?

A mortgage loan modification is a process where the homeowner persuades the lender to renegotiate the terms of the mortgage. This change in terms aims to make mortgage payments more manageable for the homeowner, ensuring they can keep their home without breaking the bank.

How Can a Mortgage Loan Modification Benefit You?

Mortgage modifications offer several advantages, including:

● Lower Interest Rates: They can reduce or even alter the interest rate on your mortgage, allowing you to pay less each month.

● Principal Reduction: The lender may also decrease the principal amount you owe, easing your financial burden significantly.

● Fee Waivers: Late fees and penalties for non-payment can add up quickly, and a mortgage modification can help reduce or eliminate them.

● Lower Monthly Payments: By changing any of the above terms, your monthly mortgage payment can become more affordable.

● Forbearance Options: You may be granted temporary relief by either stopping payments for a limited period or extending the time for making payments, helping you get back on your feet.

Lenders prefer loan modifications to foreclosures, as they still receive repayment and avoid the complex, costly process of reclaiming the property.

Promissory Notes Are Key to Foreclosure Defense

Promissory notes play a crucial role in protecting homeowners from foreclosure. Understanding the complex legal relationships between promissory notes, mortgage deeds, and various financial entities can help homeowners mount a strong defense against foreclosure. In this blog post, we'll discuss a few key aspects of promissory notes and how they can be used in foreclosure defense.

Challenging MERS' Authority to Transfer Promissory Notes

Financial institutions often use the Mortgage Electronic Registration Systems (MERS) to transfer mortgages, but some courts have questioned MERS' ability to transfer promissory notes. This challenge is because the note might have been sold to another entity or securitized, meaning it's bundled with other loans and sold to undisclosed entities.

The US Supreme Court case Carpenter v. Longan ruled that the promissory note and the deed of trust must follow the same path; they cannot be separated. Therefore, if your note has been securitized, it now belongs to an entity other than the one holding your mortgage.

Bifurcation: A Potential Weakness in Mortgage Enforcement

This separation between the mortgage deed and promissory note is known as bifurcation. It creates a defective relationship between the deed and the note, which brings into question the enforceability of the mortgage. This potentially weakens the legal position of the mortgage holder and can be used in foreclosure defense arguments.

Summing it Up

Foreclosing on a property is never easy, but with the right legal defenses and strategies, it's possible to fight back. A qualified foreclosure defense attorney can help you understand the complexities of the foreclosure process, evaluate your situation, and protect your rights with state and federal laws.

They can be an invaluable ally in these complicated times with their knowledge of legal precedent. Navigating these waters alone can quickly prove difficult, so by contacting Newland Attorneys today, you will have access to professional legal guidance and expertise that may prove critically important in this adversarial process.

Don’t wait; time is of the essence when it comes to foreclosure proceedings. Make sure that you hire someone who presents a unique set of skills for reviewing the documents related to the case. To ensure that all your options are explored properly, act fast: Reach out to Newland Attorneys now for advice on preparing a sound defense in your particular circumstance.