Process of Suing Your Lender to Avoid Foreclosure

If you’ve had trouble meeting financial obligations, you may be worried about your lender suing you. However, under certain circumstances, you can sue your lender, such as if they have violated the terms of the loan agreement or otherwise acted improperly.

Grounds to Sue a Mortgage Lender

There are a number reasons you might sue your lender, such as:

• They have not credited you for payments you’ve made
• They have violated the terms of the loan—such as attempting to foreclosure when you are not in default, demanding payment earlier or faster than the loan calls for, or charging more than they are allowed
• They have provided false information about you to employers, credit rating agencies, or the government
• They have improperly used the legal system—such as by attempting foreclosure, eviction, or wage garnishment when the facts don’t support the situation, or when they have not provided you the notice to which you are legally entitled

Damages and Recovery

First, you can sue for economic losses you have suffered. Say you’ve been charged too much—you can recover the amount you were overcharged. Or say you were foreclosed upon and evicted improperly—you can sue for the costs you incurred from moving, storage, renting or buying a new place, etc.

You can also sue to force the lender to do, or not do, something. For example, you could bring an action to stop an improper foreclosure, or to stop a bank from taking money from your account.

How a Lawsuit Against Your Lender Works

A lawsuit is a legal proceeding brought in court. You start it by filing documents called a summons and complaint with the court and serving them on the defendant (your lender). Leaving aside the technicalities of filing and service, they are what they sound like: you file a document with the court by giving it to the court, and you serve a document on the defendant by sending it to the defendant. By filing and serving in the proper way, you have started your lawsuit.

The other side then files an answer to the complaint with the court while serving it on you. The next steps are—

• discovery: paperwork that gets information from the other side; and
• motions: documents that ask the court to make something happen in the lawsuit.

Motions can sometimes result in winning early, but the plaintiff doesn’t have to file any—though he or she must respond to the defendant’s motions. Eventually, motions and discovery are done, and the case goes to trial.

At any point, the parties can settle, or come to an agreement about who has to do what, or who owes what to whom. 

Hiring a Foreclosure Lawyer for Assistance

While the principals of a lawsuit are straightforward, applying them can be difficult. The rules are very technical and have to be followed exactly. Also, just understanding your rights can be tricky, too—even if it seems that your lender has acted illegally, some nuance of their or your behavior can make what would otherwise be improper behavior acceptable.

An attorney can evaluate the situation and help you understand if you in fact have a valid legal claim against your lender, as well as what it might be worth. If you do, the attorney—who is trained in the law and who understands its procedures—can bring the lawsuit for you, so that you do not lose a valid claim because of some technicality.