The foreclosure crisis is still with us and it is expected that another 3 million homes will receive foreclosure notices this year in 2010. However, many homeowners are discovering that their lenders may not have legal rights to foreclose and are carrying out wrongful foreclosures. This new discovery opens options for homeowners to challenge foreclosures by taking their lenders to court.
Without knowing what to look for to challenge foreclosures, homeowners are at risk and unable to protect themselves from lenders stealing their dream of homeownership. Now more than ever, it is imperative that homeowners educate themselves on the foreclosure process to learn more on what their lenders can and can not do.
Here are the four most common ways lenders often carryout wrongful foreclosures:
1. Not offering or approving a loan modification even if all guideline requirements are acceptable.
This is probably why 66% percent of the homeowners who need assistance don’t get assistance from HAMP. One big reason behind this is that lenders lose money by offering loan modifications and are not very motivated to approve them. As a result, many homeowners are flat out denied to have their mortgage payments reduced even though they qualify for a loan modification. A common problem not talked about is that homeowners are being offered trial loan modifications. Which after they start making payments for a few month then they are told that they were not approved for a loan modification and shifted back to making the same mortgage payment amounts that they could not afford in the beginning. It happens more than you think.
Challenging lenders for these types of unethical business practices is a foreclosure defense and solution to force lenders to modify loan payments to make them affordable.
2. Truth and Lending Act Violations and Predatory Lending Practices
All loans including mortgage loans fall under the Truth and Lending Act guidelines. These guidelines were first put in place back in 1968 to require that lenders provide full disclosure on key lending arrangements and costs associated with loans.
If these violations are challenged homeowners can arm themselves with foreclosure defenses backed by federal statute.
3. Foreclosing Without Showing (Proofing) Ownership Of The Mortgage Note
Under the Uniform Commercial Code, the lender must provide proof that they own the original note and have it in their possession. However, many lenders have actually managed to foreclose anyway by providing a “certified copy of the note”. They can easily get away with this if the homeowner does not contest by demanding that the original mortgage note to be produced and under go forensic tests to prove it is the original. When a mortgage note has been transferred from different loan servicing companies and mortgage lenders and is kept in a securitized trust rarely can the original mortgage note be produced! Without the original mortgage note a lender CAN NOT foreclose on a property both in judicial or non judicial states.
Hence the term “Produce the Note”. Don’t trust their word ONLY a forensic test can reveal if it is the original document. Demand a forensic review.
4. Foreclosing Without Due Course
Another very important statue under the Uniform Commercial Code requires that lenders must have acquired the mortgage note in due course. This requires that lenders show how they took possession of the mortgage note and from whom in order. When mortgage notes are transferred from one lender to the next lender an assignment of the mortgage must be recorded. Numerous of times lenders carryout foreclosures without being in due course and no assignments ever being recorded. Lenders can not legally carryout foreclosures if they are not in due course.
Homeowners can challenge lenders to stop foreclosures that are not in due course.
These four examples can offer defenses to stop foreclosures and encourage lenders to agree to more affordable loan terms. To learn how-to challenge foreclosures please refer to The Insider Guide to Stopping Foreclosure Yourself, step-by-step assistance.