When a homeowner falls behind on their mortgage payments, the bank or current mortgage holder may initiate foreclosure proceedings to sell the home to satisfy the outstanding loan balance. Some homeowners may assume that they cannot stop the foreclosure process once they have defaulted on their mortgage.
Although homeowners may have various legal options for keeping their home, they may also have factual or legal defenses to a foreclosure lawsuit. These strategies could delay the legal proceedings or, under certain circumstances, fully prevent a party from pursuing foreclosure.
When you turn to our Fort Lauderdale foreclosure defense attorneys at Loan Lawyers, we will help you put together a compelling case strategy for preventing the foreclosure process and saving your home. As a reputable foreclosure defense, bankruptcy, and debt defense law firm, we know what the best options for foreclosure defense in Florida are and how they could apply to your situation. There are many foreclosure defense strategies we can utilize to help your case.
If you are facing a pending foreclosure, contact us today to discuss your legal options with a knowledgeable foreclosure defense attorney in Fort Lauderdale. Your initial case evaluation is free and without any obligation.
Lack of Standing
When a bank or mortgage holder files a lawsuit to foreclose on your home, they must have standing to file it. A party has “standing” when they have the legal right to pursue a cause of action in court. In foreclosure cases, the party seeking to foreclose must hold the note and mortgage or have the right to act on behalf of the noteholder.
However, home loans and mortgages frequently get sold by the original bank or mortgage loan company to other financial companies. Some mortgage lenders bundle multiple mortgages together for sale in a process known as “securitization.” When mortgages get sold to successor parties or become securitized, the party seeking foreclosure must prove that it has acquired ownership of the note and mortgage before it can file a foreclosure action. The court will dismiss the case when a party cannot prove its standing to file a foreclosure action.
Failure to Provide Required Notice of Default
State and federal law requires mortgage holders to provide notice of default before starting the foreclosure process. Once they receive notice, homeowners can fix or “cure” their default and avoid foreclosure altogether. When a homeowner fails to cure their default within the deadline set in the mortgage document or the notice of default, the mortgage holder can “accelerate” the mortgage loan. That means they can demand payment of the outstanding balance, not just the payments already due.
However, mortgage holders sometimes fail to follow all the notice requirements before starting foreclosure proceedings. When that happens, the court may dismiss the foreclosure proceedings and require the mortgage holder to start the process from the beginning by affording the homeowner the right to cure their default.
Statute of Limitations
Under Florida’s statute of limitations, a mortgage holder has five years to initiate a foreclosure lawsuit. If the mortgage holder files its lawsuit after this limitations period expires, a homeowner can file a motion to dismiss the lawsuit as untimely filed.
The statute of limitations on a mortgage foreclosure action begins to run when the last element giving rise to the cause of action accrues. Depending on the specific facts of a case, a foreclosure cause of action may accrue on any of the following:
- The maturity date of the mortgage loan
- The date that the mortgage holder invokes the mortgage’s acceleration clause
- The date that the mortgage holder first sends a written demand for payment
A homeowner might argue that a mortgage holder lacks the right to pursue foreclosure according to a legal doctrine known as “laches.” In a laches defense, a homeowner might argue that a mortgage holder has waived their right to pursue foreclosure. This waiver could result when the mortgage holder’s actions that delayed the foreclosure proceeding have prejudiced the homeowner’s ability to respond to or defend against the foreclosure action.
A successful laches argument may require the homeowner to show that the mortgage holder’s actions resulted in the loss of evidence critical to the homeowner’s defense to foreclosure.
Unclean Hands
The “unclean hands” doctrine refers to a legal principle stating that courts should not provide relief to a party engaged in illegal, unethical, or unfair behavior. In mortgage foreclosure cases, a court may refuse to grant foreclosure where a mortgage company has engaged in deceptive or unfair business practices, such as intentionally concealing material information from a borrower, using bait-and-switch tactics, or forging or falsifying mortgage documents.
Fraud
A homeowner might defend against the enforcement of a mortgage through foreclosure if the homeowner can show that a mortgage company procured the mortgage through fraud. Examples of fraud in the mortgage process include forging a homeowner’s signature onto mortgage documents without the homeowner’s knowledge or consent or misrepresenting the terms of a loan transaction in such a way that the homeowner does not know they have encumbered their property with a mortgage.
Bank Fails to Follow State and Federal Law Covering Home Loans
Various state and federal laws regulate the residential mortgage industry. These laws both oversee mortgage companies’ actions and protect homeowners’ rights. When a mortgage company fails to follow applicable state or federal laws, those statutory violations may delay or preclude the mortgage holder’s ability to pursue foreclosure.
Federal statutes regulating the mortgage industry include:
- Truth-in-Lending Act/Regulation Z – TILA and “Reg Z” require disclosure of material loan terms to consumers. This disclosure helps borrowers make informed decisions about whether to enter a financial transaction and protects them from inaccurate loan information or deceptive business practices. Depending on the circumstances, a violation of TILA/Reg Z may entitle a borrower to “rescind” or cancel the loan contract.
- Home Ownership Equity Protection Act – HOEPA is a statute applicable to high-interest rate loans (first priority liens over eight percent interest, second priority liens over ten percent interest, or loans with closing fees or points exceeding a dollar threshold or eight percent of the principal loan amount) that requires lenders to provide borrowers with certain disclosures.
- Real Estate Settlement Procedures Act – This statute regulates the closing process for real estate transactions. The law entitles purchasers to a detailed closing statement, prohibits kickbacks or other illegal referral fees, and reduces the amount of money a borrower must put in escrow.
The Florida Fair Lending Act also prohibits predatory lending behaviors in the mortgage industry in Florida, including loan documents with forged signatures or hidden terms, changes of loan terms immediately before closing, use of improper loan types, or use of payment terms like balloon payments or prepayment penalties designed to frustrate the borrower’s ability to pay off the loan.
Tender
A homeowner might stop a foreclosure proceeding by offering to pay the bank or mortgage holder the outstanding balances due to get the account current, a process known as “tender.” Depending on how far a foreclosure proceeding has come, the amount needed to bring the account current may include additional expenses and fees on top of outstanding principal and interest, such as the mortgage holder’s attorney’s fees or collection costs. If the mortgage holder has accelerated the loan, the homeowner may have to pay the remaining balance.
Bank Fails to Provide Proper Service of Process of the Lawsuit
Before a court can issue a foreclosure judgment, it must confirm that the homeowner and other parties interested in the property have received notice of the foreclosure lawsuit via service of process.
In Florida state courts, a party filing a foreclosure lawsuit has 120 days after filing the complaint with the court to serve the homeowner with a copy of the foreclosure complaint and the court summons. By default, a bank or mortgage holder must hire a process service to serve the foreclosure complaint and summons upon the homeowner personally.
However the court may authorize service via alternative means, such as through the mail or publication in local newspapers after the bank or mortgage holder has made reasonable efforts to serve the foreclosure complaint to the homeowner personally.
Bank Failed to Properly Assign the Mortgage or Endorse the Note
When the original mortgage lender or a party holding the note and mortgage sells the loan to a successor party, the seller or “assignor” must follow specific procedures to validly sell or assign the note and mortgage to the successor. Failing to follow these procedures will result in a defective assignment of the mortgage. A defective assignment can deprive the successor party of standing to pursue foreclosure and delay the foreclosure proceedings until the successor party can secure a proper assignment.
Common errors in assignments of mortgages include:
- Gaps in the chain of assignments (due to missing assignment documents)
- Lack of endorsements on the note
- Failure to follow the requirement for securitization of mortgages
Contact Our Fort Lauderdale, Florida Foreclosure Defense Attorneys for Help
If you’ve received notice of foreclosure on your home, you need experienced legal representation familiar with foreclosure defense strategies. Our Fort Lauderdale foreclosure defense lawyers can help you explore your options and the potential Florida foreclosure defenses you may have that might help you save your home. Don’t let the bank or debt collectors put profits above treating you fairly.
Contact our experienced Florida foreclosure defense attorneys today for a free, no-obligation consultation to discuss your foreclosure case. As a premier foreclosure defense, debt defense, and bankruptcy law firm, we will answer your questions about your rights and the foreclosure process, provide realistic options to keep your home and advise you as you choose the best solution for you and your family.
