Foreclosure occurs when a person cannot pay back a mortgage loan or other property loan. In such cases, the lender, usually a financial institution such as a bank, may be allowed to force a sale of the property and collect the proceeds in order to make up for the default amounts. They also usually have the right to obtain ownership rights to the property. Depending on the circumstances, the foreclosure process can occur either in or out of court.
Even if a foreclosure proceeding is filed against a homeowner, there may be several different foreclosure defense options available to the homeowner. Employing a defense may enable a homeowner to keep their property and possibly renegotiate terms for the mortgage. Some common foreclosure defenses that may be available to a homeowner include:
- Unconscionable mortgage contract terms- Courts may find in favor of the borrower and allow for a renegotiation of mortgage terms
- Evidence of real estate broker or agent fraud, mortgage lender fraud, or foreclosure fraud
- Failure to follow state requirements for foreclosure- If the bank or other lending institution does not follow the proper procedure for foreclosure, such as missing a filing deadline or failing to provide proper notice, they might not be able to sue the borrower
- Serviceman on active duty- Certain legal protections and special property rights may be available for certain service members who are on active duty at the time of foreclosure
Lastly, while they are not technically foreclosure defenses, there may be several ways to avoid foreclosure in the first place through foreclosure alternatives. These can include such mechanisms as a mortgage modification, forbearance, or deed-in-lieu of foreclosure. You may wish to negotiate with a lender or real estate agency to see if these are possible options for you.
In many cases, foreclosures are settled through the court. If this is the case, you can present your foreclosure defense at that time. However, some foreclosures are handled out of courts, and these are called non-judicial foreclosures. In the case of a non-judicial foreclosure, legal defenses against foreclosures are not raised automatically, and you may need to make specific petition with the court in order to have your defense applied in a court of law.
Finally, even if foreclosure has already occurred, it may be possible to regain your property through statutory redemption. This is where state law permits a homeowner to pay off their mortgage debt plus interest and reclaim the property after foreclosure. You should work with a legal professional to determine whether you can get your property back after a foreclosure.
Raising a defense against foreclosure requires an in-depth knowledge of foreclosure laws. These can often involve some complex legal concepts and can also vary from state to state. You may need to hire a real estate lawyer in your area if you need any assistance with a foreclosure defense. Your attorney can help research the laws of your state to determine what types of options you have in the event that a foreclosure claim has been filed against you. Also, your lawyer can represent you in court if you need to attend any meetings or hearings.