Law
A wrongful foreclosure lawsuit is filed by a debtor when a lien holder files a lawsuit to recover the balance of a loan. Loan amounts are usually small, and the risk of losing the property is high. In such cases, borrowers lose all their rights to redemption on the note. However, sometimes lenders use this process without just cause.
Damages Available to Borrower Another damages available to a lender through a wrongful foreclosure proceeding : damages for the loss suffered by the borrower, that are measured by the actual value of the property at the time of foreclosure, medical expenses, punitive damages and lost income during the period of default. When the mortgage company is purposely neglectful, such as failing to perform required repairs, the lawsuit can seek compensation for mental and physical pain and suffering. The lawsuit may also seek punitive damages for deliberate acts such as false advertising. Such lawsuits are not filed by borrowers.
Temporary Restraining Order An important aspect of any lawsuit, aside from seeking damages for loss and damage, is seeking an injunction to prevent the sheriff sale.
Such an injunction may be granted by the court if the borrower can demonstrate the potential danger of immediate and extreme financial harm. In addition, courts commonly issue temporary restraining orders to halt the sheriff sale until a settlement is reached. A major benefit of a temporary restraining order is that it gives time for the borrower to pay off late mortgage payments.
Experienced Attorney A lawsuit should always be pursued aggressively.
Thus, it is highly advisable to retain an experienced wrongful foreclosure lawyer who has expertise and/or knowledge of the foreclosure laws in your state. Such an attorney should be able to provide valuable advice concerning your rights under the law and how to proceed. Attorneys with experience in representing borrowers should be familiar with local court rules and be aware of the tactics lenders use to stall foreclosures.
A foreclosure lawyer should be able to access information quickly, which may prove beneficial to the borrower.
For instance, if the lender fails to serve a notice of default, the lender will likely be able to avoid the procedure if the foreclosure complaint is filed within a short period of time after such notice is served. In addition, experienced lawyers will be aware of any defenses the lender may pursue to try and avoid the foreclosure lawsuit.
Monetary Damages In the past, lenders have been known to elect to delay the foreclosure sale in hopes of negotiating lower homeowner’s compensation rates and deed-in-lieu charges.
As such, homeowners would file additional wrongful foreclosure lawsuit actions in hopes of recovering additional damages for pain and suffering, lost income, past due property taxes, and other past due expenses. However, damages awards have been quite limited. Such awards are usually dependent on the amount of damage. A past due mortgage is generally considered a more severe event than a broken heater or water pipe.
Disbursements A borrower must also be careful to understand all required disbursements from the proceeds of his or her loan prior to submitting the claim for foreclosure.
Some lenders will advance the entire proceeds, while others will advance only a portion. Additionally, some states will allow a borrower to submit a partial claim, but will then withhold the balance unless the borrower can present a full and accurate return detailing how he or she will pay for future missed payments. This is important, as a lender may be convinced that a borrower is likely to miss at least one future payment in the near future if the foreclosure process continues.
Methods of Defending Non-Judicial Foreclosure Procedures Some states allow borrowers to use non-judicial foreclosure actions to defend against bank wrongs. This generally requires filing a complaint in a court of law against the lender. In this process, the borrower must first file a complaint with the court that issued the foreclosure order. If the complaint is denied, then the borrower must move to a state court. From there, he or she must prove that he or she is not able to repay the mortgage by a preponderance of the evidence, a preponderance of the facts, or a preponderance of the testimony. The courts have typically held that borrowers are not allowed to use non-judicial foreclosure procedures to defend against bank wrongs, but courts are still very likely to issue non-judicial foreclosure orders in instances where the lending parties have not properly followed procedures required by law.
