The very idea that you could lose your house is a very scary and stressful thought. This matter can be made even worse when you do not believe you have any way to defend yourself against a foreclosure action. However, there are some legal defenses that you can use when facing an action for foreclosure.

Although many foreclosure legal defenses will depend on state law and the facts of a specific case, the following are some general foreclosure legal defenses that you might be able to use in such a case:

  • Mistakes: A mortgage agreement is basically a contract, meaning that it is subject to contract laws and standards. Thus, if a mortgage agreement contains a major mistake or error, then it could potentially affect the outcome of a foreclosure action.
  • Fraud or Undue Influence: Mortgage documents cannot be signed or created under conditions of fraud or undue influence. Therefore, if you believe that you were forced to sign a mortgage agreement under the threat of violence or by deceit, then such actions could invalidate the mortgage agreement.
  • Mortgage scams: Various types of mortgage schemes and scams have arisen over the last decade. In particular, predatory lending is one of the most common and is considered a statutory violation in many states.
  • Statutory Violations: Each state has its own laws and legal requirements, which outline the foreclosure process. If a lender has violated these laws, then this could act as a defense against a foreclosure action.

    • For example, most states require that lenders send a notice of default at least 30 days in advance of initiating the foreclosure process. If a lender fails to give a borrower proper notice, then the court may have to delay any existing foreclosure proceedings and order that the lender redo the process properly.
  • Promissory Notice Issues: Only the original owner of a mortgage loan may initiate the foreclosure process. Once this process begins, the owner must be able to provide evidence of the original promissory note. If an entity cannot provide proof that they are in fact the owner of the promissory note, any foreclosure proceedings must be postponed until they can supply proper proof.

It is important to note that many of the defenses that are listed above may not entirely erase all foreclosure issues. For instance, some of the above defenses may only serve to delay or restart the process. Regardless, having a court delay an action for foreclosure can still be very useful since this will give you more time to produce funds. In turn, this help can prevent your house from being foreclosed upon in the long run.

What Is the “Produce the Note” Defense in Foreclosure?

In general, the “Produce the Note” defense is a type of legal defense that is commonly cited against actions for foreclosure. It concerns the endorsement of the promissory note, which gets signed along with the mortgage document. For instance, when a borrower requests to take out a loan to pay for a house, they will be asked to sign both a promissory note and the mortgage document itself (i.e., the deed of trust).

It should be noted, however, that the promissory note is the actual promise made to repay the mortgage loan, not the mortgage document. As such, the owner of the note is the only party who has the legal right to enforce the promise contained in the note and to collect the debt.

Since a lot of mortgages tend to be sold to other banks, a property owner may use the “Produce the Note” defense and demand that the foreclosing bank provide proof that they have possession of the original promissory note and thus have the legal authority to foreclose on the property in question.

If the bank does not have possession of the promissory note, then the property owner may be able to avoid foreclosure due to the fact that the bank does not have any legal authority to foreclose on their property.

What If the Terms of the Foreclosure Were Unfair?

When the terms of a mortgage agreement are so unfair and lopsided that it would shock the court, then a property owner may be able to defend themselves against an action for foreclosure by filing a claim with the court that challenges the terms of the mortgage agreement. This type of claim essentially says that the terms of the mortgage agreement are unfair or unconscionable. In other words, it is a way to defend against an unfair contract case.

However, this type of defense is extremely difficult to prove because before a property owner or borrower signs a promissory note, they are granted the right to read all of the terms and conditions of their loan. Thus, by reading and then signing the promissory note and agreement, they are essentially saying that they agree to all of the terms and conditions contained in the document.

How Do I Raise a Defense to Foreclosure?

In order to raise a defense against a foreclosure action, a property owner must assert a specific defense before the court. Also, if foreclosure is being sought through a judicial foreclosure sale, which is filed in state court, then the property owner must seek approval of the defense from a judge.

A property owner can do this by either filing a lawsuit or a counterclaim and stating that the foreclosure action is illegal for whatever reason they are alleging. The property owner must also request that the same court issue a stay to put the foreclosure on hold until the issue regarding the illegal foreclosure action is resolved.

What Are Ways to Avoid Foreclosure?

In the event that there are no legal defenses available that are applicable to the circumstances of a particular foreclosure action, then there may be a few other things that a person can do to avoid foreclosure. At the very least, there are certainly some steps that a person can take to minimize the impact of a foreclosure action.

For instance, many lenders want to and will actively try to avoid the foreclosure process by presenting different payment options. They may negotiate with the borrower for a new payment plan to help them satisfy their debts without having to go through with a foreclosure action.

Some other ways that a borrower may be able to avoid a foreclosure action include the following methods:

  • Talking to lenders: A borrower should contact their lending institution or bank and see if they would be willing to work with them by suspending or lowering mortgage payments until the borrower is able to start making regular payments.
  • Requesting a forbearance or partial payments: A borrower should also ask their lending institution or bank whether they would be willing to only accept partial payments for several weeks or months. This negotiation tactic is known as a forbearance. Many lenders are willing to agree to a forbearance, so long as a borrower can prove that they will soon be able to start making regular payments again.
  • Asking the government for help: There are a number of different government agencies that a borrower can contact for help with avoiding a foreclosure action. Such agencies can provide various resources and assistance to homeowners who are facing a foreclosure action.

    • In some instances, a government agency may even be able to help a borrower or homeowner to modify the terms of a loan or get their payments reduced.
  • Filing for bankruptcy: Although filing for bankruptcy should be a borrower’s last resort, in some cases it may be necessary to file for bankruptcy with a court in order to remain in possession of one’s home.

How can a Lawyer Help with Foreclosure Proceedings?

As discussed above, every state has its own set of laws and procedures when it comes to foreclosure proceedings. Therefore, if you believe you are wrongly facing foreclosure proceedings, then it may be in your best interest to hire a local foreclosure lawyer as soon as possible.

An experienced foreclosure lawyer will be able to advise you on the specific laws and requirements for foreclosure proceedings in your state. Your lawyer can also help you prepare a case and can perform legal research to see if there are any defenses you can raise against the action for foreclosure.