THERE ARE A NUMBER OF DEFENSES TO THE TYPICAL MORTGAGE FORECLOSURE ACTION! THE FIRST “CLASS” OF DEFENSES ARE THOSE TYPICAL OF LITIGATION IN GENERAL.

These are based on defects in the procedure taken by the lender’s attorneys in the process of suing you for foreclosure. There has been such a rush to file these cases that many foreclosures we’ve seen havenumerous procedural defects, such as improper service of process. Many lenders seem to depend on their borrowers not hiring an attorney to fight them, and just giving up. Sadly, about 95% of homeowners in foreclosure do exactly that!

In some cases, lender misrepresentation and abuse during the course of suing you (such as exemplified in the robo-signing scandal), may rise to the level of fraud on the court.

THE SECOND CLASS OF DEFENSES ARE BASED ON THE FORM AND HISTORY OF THE MORTGAGE.

In the process of turning mortgages into investment securities (aka “securitization”), lenders engaged in many legally questionable practices, which may well provide a defense to a mortgage foreclosure (See MERS to the left). The entity suing you may not have legal standing to bring that lawsuit. In many cases the lender pleads a missing promissory note (it is pretty common in a world where the typical mortgage goes through several hands within a year or two of closing, for the lenders to lose track of the original promissory note). A promissory note is a negotiable instrument, and, as such, can be exercised by other than the original lender, if the original falls into the wrong hands. You are entitled to know what happened to your original promissory note.

It may even be possible that, one way or another, your loan has actually been PAID OFF, and the lender is seeking to “double-dip!” Examples include being paid off by AIG or TARP money, and in some cases, title insurance may have paid off some or all of the mortgage. We have never seen a case where the lender has notified the borrower that the loan had been paid.

THE THIRD CLASS OF DEFENSES ARE BASED ON STATE OR FEDERAL CONSUMER PROTECTIONS STATUTES.

These may include the Truth in Lending Act (TILA), the Real Estate Settlement Procedures Act (RESPA), or the Fair Debt Collection Practices Act (FDCPA).

Some mortgages have such serious defects in their original execution that you may be entitled to rescission, under TILA. Rescission is a powerful remedy for you, the borrower. If you are entitled to rescission, the lender may be ordered to refund your pre-paid loan fees, pay your attorneys’ fees, and, in some cases, cancel the mortgage! Not all cases qualify for this “nuclear” defense, but if yours does, wouldn’t you want to know? Only an attorney can tell you if you have a chance to win this remedy.

We see other cases where actual fraud took place in procuring your mortgage. If the lender is guilty of wrong doing (such as predatory lending practices), and when good and innocent people are now suffering the inevitable circumstances that were put into play due to these lending practices, the piper may not need be paid… he may need to pay you.

FINALLY, FORECLOSURE IS AN EQUITABLE REMEDY, AND AS SUCH, ENTITLES THE DEFENDANT TO CERTAIN EQUITABLE DEFENSES, SUCH AS UNCLEAN HANDS, LACHES, OR BALANCING THE EQUITIES.

Only a qualified attorney, such as those at Anderson & Brodersen, P.A. can tell you if you have grounds for one of these (or other) defenses to a mortgage foreclosure.