Challenging Your Foreclosure Process

Written by: Christy Rakoczy

Many people who are facing foreclosure simply resign themselves to losing their home.  Sometimes, however, foreclosure is not inevitable.  You have other options, including a short sale where you sell the home for less than you owe.  You also have the option of challenging the foreclosure or in raising defenses to it.  Challenging foreclosure is the best option when you do not believe that your bank has a legitimate right to foreclosure.  Challenging your foreclosure can also buy you some extra time to explore alternatives to foreclosure.

How to Challenge Foreclosure

Banks can, and do, make mistakes both in bringing wrongful foreclosures and in the process of issuing loans.  If your bank is acting improperly or has done something wrong, you have several different options to explore to challenge your foreclosure.  For example, defenses you can raise include:

  • Unconscionability: While people generally have the right to enter into any contract that they wish to enter into and will be bound by that contract once they sign it, there are some public policy exceptions to this general rule.  One contract comes in the form of unconscionable adhesion contracts. Adhesion contracts are those where you either have to sign or walk away from the entire transaction, and where you have no negotiating power.  A mortgage contract typically qualifies.  However, proving unconscionability is a tough standard and you have to prove that the bank acted so badly when you signed your mortgage loan that it “shocks the conscious” of the judge who is hearing your case.  A loan that is simply unfair isn’t going to cut it here- something extreme must have happened.  For instance, a bank preying on the elderly or disabled and pressuring them to agree to loans they cannot understand might be an example of unconscionability.
  • Foreclosure proceedings weren’t properly followed: Banks cannot just take your home; they must either use a judicial foreclosure process or a non-judicial foreclosure process.  If the mortgage lender did not follow the steps required in your state, then the court can order the current foreclosure action stopped.  While the lender could simply start over at the beginning and follow proper procedure next time, this defense will buy you time to explore foreclosure alternatives (or, simply, more time in the home before you have to leave).
  • Show the note: The bank or mortgage lender has to prove you actually owe the money that they claim you owe.  This means they have to produce original mortgage paperwork.  If you demand that they prove you owe the debt, they have to stop foreclosure until they can meet this demand.  Often, it takes time for paperwork to be located, especially if your loan has been sold to a different lender than the lender who originated the loan.  If the paperwork is never located, the foreclosure cannot go forward (this is rare, but it happens).  Even when the paperwork is ultimately found, the foreclosure process will still be slowed down.
  • Prove you are serving your country: The Service members Civil Relief Act (SCRA) allows a postponement of foreclosure for up to nine months if you are an active duty service member who is serving your country at the time when the lender wishes to foreclosure.  All foreclosure actions against active duty service members also must take the form of judicial foreclosures, even in states where non-judicial foreclosure is permitted.

Depending on your circumstances, any of these defenses can put a halt to the foreclosure process – in some cases, permanently.  You will have to challenge your foreclosure in front of a judge, and you’ll have to raise your defenses within the time limit for responding to the foreclosure action, so be sure to do your research or seek help from an attorney to ensure you protect your rights to challenge foreclosure.


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Challenging Your Foreclosure Process

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