In short, a mortgage is a real estate lien on your property, placed by a bank or other financial institution, for the repayment of money that you have borrowed from them in order to pay for the property. Mortgages involve a promissory note, which is a contract that states that you (the borrower) agree to repay the lender even if you sell the property. Mortgages also involve a deed of trust, which acts as a lien on the property, guaranteeing that the lender will get their money back, even if the borrower does not pay. The purpose of a mortgage is to help the borrower buy property when they do not necessarily have the money to do so immediately, and to ensure that the lender gets their money back.
Thus, mortgage claims are the legal proceedings that involve the mortgage loan of a home or other residential property. A mortgage claim usually involves a dispute between the homeowner and the lending company. These types of lawsuits can often result in the homeowner losing their home while the mortgage lender may be losing, or have already lost, mortgage payments. As such, mortgage claims can often be contentious and complicated.
Mortgage lawsuits commonly result in the lender being granted a lien, allowing them to take possession of some of the borrower’s property in order to make up for the payments. Further, once a borrower fails to pay their mortgage or deed of trust, the lender maintains the right to begin the foreclosure process.
What Are Some Legal Issues Associated With Mortgage Claims?
Because mortgages are complex financial arrangements involving valuable property, mortgage claims often involve a variety of different legal issues and disputes. Additionally, mortgage claims may involve multiple parties, which further complicates matters. Some examples of the more common legal issues associated with mortgage claims include:
- Disputes With a Mortgage Lender: Mortgage lenders are subject to various legal restrictions and duties. Therefore, if a mortgage lender violates any of those restrictions or duties, they may face a lawsuit brought by the borrower;
- Mortgage Loan Fraud: Mortgage loan fraud refers to any misstatement, misrepresentation, or omission made by someone attempting to get a loan, which is relied upon by a lender. Mortgage loan fraud involves the use of fraudulent or deceptive mortgage documents, and is common amongst inexperienced buyers. It is important to note that lying on your mortgage loan application is considered to be mortgage loan fraud. It is also important to note that lying includes exaggerations;
- Mortgage Loan Documents Issues: This will typically involve some sort of dispute over the mortgage contract, or other various provisions in the loan agreement;
- Subprime Mortgage Issues: A subprime mortgage is a loan to buyers who may have difficulties repaying the loan. Unfortunately, these sorts of mortgages are generally obtained through fraud or predatory lending practices; and
- Liens: As previously discussed, some mortgage disputes result in the mortgage lender obtaining a lien. This allows them to take possession of the borrower’s property, and is generally reserved for cases involving non-payment or default on the loan.
As previously mentioned, mortgage claims sometimes involve multiple parties which further complicate an already complex issue. An example of this would be a homeowner taking out a second or even third mortgage, affecting the way that lawsuit proceeds.
What Are Some Common Legal Remedies Involved in a Mortgage Claim?
The most common legal remedy for mortgage claims is a damage award in order to cover losses. Usually, it is the borrower being ordered to pay the lender what they owe in nonpayment. Once again, if the borrower fails to pay their mortgage or deed of trust, the lender has the right to begin the foreclosure process.
However, even after they have begun the foreclosure process, the borrower is granted a grace period in which to pay their missed payments. If the mortgage remains unpaid by the end of this grace period, the lender may report the borrower to the credit bureau. If reported, the borrower’s credit score will likely fall and the report ay be noted on their credit history.
Another remedy for mortgage claims is wage garnishment, in order to make up for the missed payments. Wage garnishment works by the court ordering the borrower’s employer to take a portion of the borrower’s paychecks to be sent to the court or an agency that processes such debt payments. Sometimes, the parties involved can agree to a new debt arrangement that would be more beneficial to all parties involved, potentially avoiding wage garnishment. A mortgage agreement will generally state if it is possible to create a new debt arrangement for those who are behind on their mortgage payments.
Another legal remedy that is commonly involved in mortgage claims is an injunction. An example of this would be a requirement that the borrower sell their property in order to repay the lender. In some cases, a mortgage claim can actually assist the borrower who is struggling to make their payments.
Do I Need an Attorney for a Mortgage Claim?
As can be seen, mortgage claims can be complex issues, especially when multiple parties are involved, or when the borrower is facing foreclosure. Therefore, if you need assistance with a mortgage claim, you should consult with a skilled and knowledgeable mortgage attorney in your area.
An experienced real estate attorney can help you understand your rights according to your state’s laws, as well as your mortgage agreement. Additionally, they can represent you in court as needed.