In any legal matter, whether it is civil or criminal, knowledge is the key. This holds for foreclosure defense cases as well. Helbing Consumer Law is dedicated to helping our clients through the tangled web of foreclosure defense. We explain the process and all that is entailed, all your options and what course of action we believe is our client's best to save their home.
What is the purpose of the Foreclosure Defense strategy
A foreclosure defense strategy aims to show that the bank has no legal authority to foreclose on your home. The capacity of an attorney to question how the mortgage business works determine the likelihood of victory. The approach attempts to exploit weaknesses in the system. It assumes that lenders are acting illegally or unethically.
Foreclosure defense is a new idea that is growing in popularity as the number of foreclosure cases increases. While some courts accept foreclosure defense arguments, others dismiss them. And rule in favor of the banks rather than the homeowners.
The foreclosure picture has changed as a result of a rising number of wins by homeowners in state and federal courts. Thus providing hope to tens of thousands of other homeowners in similar circumstances.
Many major banks practice unorthodox, unaccepted, or even unlawful activities. These include edited mortgages, loan modifications, and foreclosures. These activities have handed homeowners more weapons with which to fight against foreclosures.
3 Effective Foreclosure Defense Strategies
File for Chapter 13 Bankruptcy
Bankruptcy can be a frightening experience for anyone who has fallen behind on paying back debts. For those who do not have access to credit or disability income, the only option available is to file for Chapter 13 bankruptcy. This is not something that should be entered into lightly. Some major disadvantages may make bankruptcy a bad idea.
First, there is the issue of assets. When someone files for bankruptcy protection, their property is usually exempt from the process. This means that your home cannot be sold to pay your debts. Chapter 13 protects you from foreclosure sale.
However, the exemption does not apply to other liens against the property such as mortgages. This means that you will need to sell any non-exempt assets that you own to pay back your creditors. This can be very expensive and may not be possible.
You may also lose any marital assets that you hold jointly with your spouses, such as credit cards or car loans. Even IRS debt such as student loans and tax debts are exempt from bankruptcy. This means that you can't discharge them in any way through a bankruptcy filing.
Reduction of the Loan’s Principal
In a foreclosure situation, a loan's principal reduction may provide a means of escaping foreclosure. This is by allowing the homeowner to settle the loan for a lesser amount. Through this strategy, you may be able to avoid the loss of the house.
This is if you can negotiate with the lender a workout plan. That satisfies both your financial and personal obligations. A successful negotiation may allow you to keep your home. In some states, a reduction in the principal amount owed on a loan forms a defense strategy.
If you believe that you are facing foreclosure, but you do not have enough equity accumulated to meet the loan balance. Or your mortgage payments are too high. The lender may choose to file a foreclosure action to recover the deficiency.
Foreclosure proceedings can only be initiated after the lender has had legal recourse. Foreclosure proceedings will continue until the loan has been repaid in full or the deficiency is converted into equity.
When the court orders the sale of the property, the proceeds from the sale will go towards paying off the loan. A reduction in the loan's principal as a defense strategy may enable the lender to do this. It may not, yet, prevent the sale of the property if you are still in default of your loan.
Elimination of Penalties for Late Payments
Elimination of late fees and other charges can be an attractive option for many people. This is especially so in the current economic climate, which has made many people incur further debt. Many people are finding it difficult to stay afloat financially.
As a result, there have been increasing numbers of people filing for bankruptcy as they are unable to pay their creditors on time. Hence, a credit card company will use the Non-Recourse or Do Not Pay law to attempt to recover at least some of the money owed.
A defense lawyer will be able to provide valuable advice on how to best proceed with Non-Recourse or Do Not Pay laws. They will know of special defenses that may be available. To help the client avoid paying fees and penalties for non-payment. This can often be the best course of action because the potential outcome could mean a reduction in the amount owed.
A Promissory Note
Every state has laws and statutes. These allow homeowners to take back their property from foreclosure. And there are also defenses that homeowners can use in court to prevent a foreclosure from happening. One of the most common defenses is the so-called "promissory note."
A promissory note is a written contract that spells out exactly how the homeowners will repay the mortgage holder. This is when they are unable to pay the mortgage. While some states still have archaic laws on this practice. The vast majority of states now require that the lender give a homeowner a chance to redeem their property.
This is before repossessing it, and then give them a certain amount of time to do that. If the lender fails to give the homeowner a chance to redeem themselves, or they fail to follow through with a redemption period. Then the homeowner can file a lawsuit against the lender. This is to force the lender to give a homeowner a chance to redeem themselves by paying the balance of the mortgage on time.
In other words, the lender is required to give the borrower a deed instead of foreclosure. The deed in lieu allows the borrower to return their home to the lender, but without the hassle and expense of a foreclosure. There are several things to keep in mind when filing this kind of action.
Foreclosure Defense and Title Chain
One of the main things that the bank needs to do is to give the owner of the property notice of default in payment of the debt. As well as giving him a chance to cure the default. The banks need to be able to convince the courts that the owner is in default of the debt. Hence will not be in a position to pay the same.
This is done by having a copy of the promissory note and mortgage document secured by a deed of trust, which is known as the Secured Power of Attorney. A deed of trust is secured by the property and hence the property can be sold off to clear all debts. If you have a promissory note, then the banks are allowed to call it Secured Power of Attorney.
This means that they can take over your property without any court action on your part. This secures a Foreclosure Defense and Chain of Title. The reason why the lenders need to use a Secured Power of Attorney is that they cannot do anything to the property.
That is if the borrower does not pay off the debt in full. The lenders can sue you in court and pursue collection if you do not follow their terms. The banks want to get their money back from the lenders. Whereas the borrower wants his property cleared off with no court proceedings. The process of clearing a chain of title is generally called foreclosure.
Digging Yourself out of the Pit of Foreclosure
A foreclosure defense attorney can help you with many things. These lawyers are responsible for the paperwork and the discovery process in foreclosure cases. This is why you will have to be very clear about what you want them to do for you if you want them to take on your case. This means that you need to let them know how you would like them to proceed with the case.
Also, explain the situation you are in. So that they can determine if they should proceed with pursuing your claim or not. Your lawyer needs to be aware of everything about your case to be sure that your rights are protected. And that you do not end up paying for something you have no right to.
Many foreclosure defense practices will have forms that you will need to fill out. This means you will need to send them your completed forms and let them know when they can come and look over them. Some of us are more than willing to answer your questions. As well as tell you what the best course of action is for your situation. When you know what is happening with your case it will be much easier to know what you need to do next. Or what options might be open to you.