The following are legal defenses to
foreclosure to beat the bank:
1. Truth
in Lending Act (TILA) violations enabling rescission. If
your loan is a refinance, the bank must have provided you a set of
disclosures at the time of closing. If these disclosures are
inaccurate, the loan is statutorily rescindable under TILA. For
example, in a foreclosure action, the finance charge must have been
accurate within $35 or the loan may be rescindable. This means the loan
is cancelled and all money paid to the lender is refunded.
2. Truth
in Lending Act (TILA) violations enabling damages. If
you purchased the property with the loan or used the proceeds to
refinance and proper disclosures were not given, then you may be
entitled to money damages to offset the foreclosure.
3. Home Ownership and Equity
Protection Act (HOEPA). This is a very powerful federal
law governing high cost refinance loans. If your loan is under $150,000
or the initial rate was above 8%, you should evaluate your loan for
violations of this act. Violations here enable rescission and
substantial money damages that can be in excess of the loan’s dollar
amount.
4. Failure
to Provide a Correct Notice of the Right to Rescind.
There is a specific notice that must be provided to refinance customers
at closing. If this form is inaccurate or incorrect, the loan is
rescindable up to three years after the closing date.
5. Breach
of Contract. Many times the lender will do things that
are unfair or unjustified before starting the foreclosure process. Just
as you have an obligation to pay the mortgage, the lender has a
responsibility not to interfere with your ability to do so – like force
placing insurance making the payments substantially more expensive than
they should have been.
6. Real
Estate Settlement Procedures Act. This federal law
governs many types of disclosures that lenders must provide at the time
of closing, in addition to prohibiting things like kickbacks and
unearned fees. It enables damages, and sometimes rescission if the
error triggers TILA.
7. Fair
Debt Collection Practices Act. This federal law requires
servicers or lenders who obtain the mortgage after default follow
specific protocol in attempting to collect on the debt. A failure to
follow this law enables statutory damages and attorney’s fees.
8. Fair
Credit Reporting Act. This federal law governs lenders
ability to report information about the mortgage and requires the
accurate reporting of negative information. Violations of this act also
enables damages and attorney’s fees. Punitive damages might be
available under this act.
9. Real
party in interest. This is a procedural defense to
foreclosure that can be extremely effective at stopping the lender’s
ability to foreclose. It essentially questions the ownership of the
mortgage and questions whether the foreclosing party is, in fact, the
holder of the mortgage and note.
10. Unconscionability.
This defense is focused on the events surrounding the creation and
closing of the mortgage loan. A violation here gives the court great
leeway in deciding whether the mortgage should be voided or changed.
11. Failure
to state a claim upon which relief can be granted. This
general defense attacks the lender’s ability to foreclose and is can be
used in conjunction with one of the other foreclosure defenses.
12. Failure
to establish conditions precedent. Want to get a
foreclosure action thrown out of court right away? Use this defense
that attacks the lender’s pre-foreclosure processes.
13. Failure
to comply with FHA pre-foreclosure requirements. FHA
requires every lender to mail a booklet called “How to Avoid
Foreclosure” and set up a face-to-face meeting with the borrower before
foreclosing (in most cases). If the lender does not take these steps,
then it cannot foreclose.
Article Source: http://www.articlesbase.com/
national-state-local-articles/legal-defenses-to-foreclosure-
561043.html About the Author
The author of 23 Legal Defenses to Foreclosure has
identified over 50 legal defenses to foreclosure (23 with detailed
explanations), which are listed in his book. For more information about
each of the defenses above, consider the book, 23 Legal Defenses to
Foreclosure, by
clicking here. The book includes checklists and easy-to-read
chapters that show you how to identify these errors in your own loan. | 