Defenses to Foreclosure

The Truth in Lending Act (TILA) is a consumer protection statute enacted by Congress to let borrower police lenders who did not accurately disclose the finance charges.  TILA gives borrowers the right to seek actual and statutory damages.  Most importantly, TILA gives the homeowner a right to rescind the transaction for up to three years for material violations of the Act.  This means the Bank must "undo the deal" and give you back all the interest and fees you paid on the loan.

Rescission can be used to invalidate a mortgage on your property. 

The Real Estate Settlement Procedures Act (RESPA) is another consumer protection statute designed to stop lenders from charging illegal fees that make mortgages more expensive.

RESPA forces Lenders to provide borrowers with accurate disclosures of the closing costs, lender practices, and relationships among the companies that provide services before, during and after closing. RESPA also prohibits kickbacks and referrals fees.  RESPA covers loans secured with a mortgage placed on a one-to-four family residential property.

Home Owners Equity Protection Act (HOEPA)
A violation under HOEPA may be raised as a strong defense to the foreclosure.  An attorney can review your loan documentation to determine if the lender charged a high interest rate and excessive fees. 

Fight Back Against Predatory Lending!
Did your mortgage broker convince you to sign a teaser rate or negative amortizing loan? 
Did you fall into the subprime loan trap of pay option loans causing so many foreclosures in America? 

Many of these abusive tactics targeted borrowers who actually qualified for regular loans.  Banks make thousands of dollars in  fees and interest by putting the borrower into a subprime loans.  Brokers became greedy and steered borrowers into subprime loans to receive higher commissions. 

If you think you may be a victim of predatory or unfair lending practices, click here.  Bruce Jacobs & Associates can use evidence of predatory lending as strong leverage in negotiating a resolution to your foreclosure.

Predatory lending practices often serve as the most powerful defenses you can raise in a foreclosure action.  In Florida, foreclosure is an equitable action which means the Court is empowered to reach a fair result. 

If your lender preyed on you with an unfair loan, you can fight back. Bruce Jacobs & Associates are former bank lawyers fighting foreclosure!

Other Defenses Against Foreclosure

Procedural Due Process
Under Florida law, you are entitled to conduct full discovery to formulate your defenses to foreclosure.  You have the right to demand your lender produce documents, witnesses, and answer questions under oath.  The proper exercise of discovery is an excellent source of leverage in negotiations with your lender.

Rescission
If you refinanced your home and signed your current mortgage less than three years ago, you may still have the right to rescind the loan.  If your loan can be rescinded, you can recover the interest and finance charges paid to your lender.

Lost Notes
The vast majority of foreclosure lawsuits contain a lost note count.  Florida law requires lenders to attach a copy of the note to their complaint.  If the Lender cannot provide a copy of your mortgage, they cannot foreclose your mortgage.

Mortgage Electronic Registration Systems Inc. (MERS)
MERS is a company created to help Wall Street package thousands of mortgages into the securities which caused this mortgage meltdown.  MERS presumes to hold the mortgage as a "nominee" for the true Lender who in fact holds and owns the loan. The relationship of these entities may materially affect your lenders' right to foreclosure.

Many lenders mistakenly purchased "forced-placed" insurance policies under the mistaken belief that the homeowner let their own insurance policy lapse. If the homeowners have their own homeowner's insurance policy, they should not be paying for the lenders insurance.

Lost or Misapplied Payments
Lenders are not perfect.  In fact, many lenders make mistakes in the processing payments.  Sometimes payments are credited to the wrong account or posted on the wrong day.  This loan servicing errors can provide excellent leverage to negotiate a foreclosure.

Failure to Accelerate the Note:
The loan cannot be foreclosed until the loan is accelerated, if required, and notice must be sent to the buyer.

FHA-Insured Loans
Under the FHA loan program, loan services are required to provide special counseling for borrowers before foreclosing their loan.  The lender must mail a counseling notice to the borrower within 45 days of their default.  The lender must conduct a face-to-face meeting with the borrower within 90 days of default.  The lender must also provide the borrower with a notice of available counseling. Failure to comply with these rules is an affirmative defense that can prevent a foreclosure.

Accepting Payments After Foreclosure
Some lenders make the mistake of accepting partial payments during the foreclosure.  If the borrower is not in bankruptcy, the borrower may assert partial payment as a defense to the foreclosure

Unfair and Deceptive Trade Practices
Where the loan displays fraud, abuse or unfair trade practices, these may be difficult defenses to a foreclosure for the lender to overcome.  Examples of unfair trade practices include:

  •  Loan "flipping" -- frequent refinancing resulting in little or no benefit to the borrower that generate excessive fees and prepayment penalties
  •  Refinancing of special subsidized mortgages that result in the loss of beneficial loan terms;
  •  "Packing" of excessive and sometimes "hidden" fees in the amount financed;
  •  Using loan terms or structures like negative amortization to make it nearly impossible for borrowers to reduce or repay their loans
  •  Using balloon payments to conceal the true financing costs and force borrowers into costly refinancing transactions or foreclosure;
  •  Targeting older or unsophisticated borrowers for inappropriate or excessively expensive credit products, especially where they could qualify for mainstream credit products and terms;
  •  Inadequate disclosure of the true costs, risks and, where necessary, appropriateness to the borrower of loan transactions;

Fair Debt Collection Practices Act ("FDCPA")
Attorneys who file foreclosure cases are considered debt collectors under the FDCPA and must comply with statute.  Violations of the FDCPA can give rise to a statutory and actual damages claim which can complicate a foreclosure.

Incorrect Notice or Service
Many lenders use shoddy services that fail to comply with the fundamental due process requirements that ensure the borrower has notice of the foreclosure.  The Lender's attempts to use newspapers to serve a foreclosure is often done in error, without containing all the information required for the notice to be accurate.

Call Jacobs | Keeley, PLLC for a consultation or send us an e-mail. We can evaluate your case today.