I’ve noticed a trend among people I speak with regarding foreclosure
cases. They often ask how it’s possible to defend or win when the
bank is foreclosing. The typical rational I hear is – money was
borrowed and not paid back, right? Sadly, this logic seems to have taken
ahold of homeowners, banks, and judges alike. Like most things in the
law, it’s not so black and white. There are several key elements
that must be established before a bank even has the right to file a foreclosure
lawsuit. To highlight my point that foreclosure cases are winnable and
don’t just boil down to the basic idea of money not being repaid,
let me tell you about a case I recently won.
Our client took out a modest mortgage in 2006 to buy their home. Like many
of you, their mortgage was sold or transferred several times, eventually
ending up in a mortgage trust. Due to unforeseen circumstances, our client
fell on hard times and was not able to afford their mortgage in 2014.
And like many of you, their mortgage was a “standard” mortgage,
meaning it included several clauses that are quite common among residential
mortgages throughout the country. One of these clauses is frequently referred
to ask “paragraph 22” – an obligation on the bank to
give the borrower one last warning and chance to bring their loan current
if they ever fall behind.
We call this obligation a conditions precedent – something the bank
must comply with before they are entitled to file their foreclosure complaint.
Specifically, they must provide notice to our client that their account
was in default, X amount of money is due to bring it current within 30
days, and several other warnings about what may happen if the past due
amounts are not paid. Unfortunately, the system is set up such that although
the bank must comply with this conditions precedent before they file their
complaint, there is no method to check if this was done prior to the bank
filing their lawsuit. In fact, the best time to really challenge if the
bank held up their end of the bargain is after the lawsuit was filed.
It’s frustrating that these types of issues and defenses can’t
be resolved earlier – it would save homeowners and banks time and
money. But, we have to work within the system as best we can.
Fast forward to our trial, and sure enough the bank provided a copy of
the notice they allegedly sent to our clients prior to filing the lawsuit.
The funny thing about the notice (and all the other trial evidence they
provided) was that there were no documents to show that the notice was
actually mailed to our clients. What good is the notice if our clients
never received it because the bank never mailed it out? For all we knew,
the bank created the notice sometime in 2014, but never actually attempted
to have it delivered to our clients. Without proof that the notice was
sent to our clients, the homeowners were never given the opportunity to
try and bring their loan current back before the lawsuit was filed. So
we used this to our advantage. Paragraph 22 of the mortgage makes it abundantly
clear – the bank cannot foreclose on the home until they provided
our client notice in compliance with the requirements of this conditions
At trial, the bank entered all of their evidence, but did not show the
court any evidence to prove that the notice was mailed to our clients.
This was a fatal flaw for the bank and thankfully, the Judge made the
right call in dismissing the bank’s complaint. So it goes to show,
contracts, such as a note or mortgage, can be complicated and impose additional
requirements on both parties, before any lawsuit can take place. The right
attorney can help you navigate these documents and use them to your advantage
over a system that isn’t always fair to the defendant.
If your bank has filed foreclosure action against you, contact us to set
up and appointment to go over your options. For more information about
foreclosure defense, please visit our
website here. Loan Lawyers has help over 5,000 South Florida homeowners and consumers
with their debt problems,
contact us to see how we may be able to help you.