There are foreclosure defense tactics that can be used by you or your attorney to save your home. It is important to educate yourself about the foreclosure laws and lending laws in your state as well. Also, you should review your mortgage documents to determine what your rights are with regard to default. It is also a good idea to investigate any government and state foreclosure prevention programs available to you. You should speak with a foreclosure defense attorney or certified HUD housing counselor to find out your options to save your home from foreclosure.
Defense Tactics
- Negotiate a loan modification, forbearance, reinstatement, short sale or deed in lieu of foreclosure.
- Have your attorney review your mortgage documents by conducting a forensic loan audit. Your attorney can then use any proof of violations committed by your lender regarding truth and lending laws and other federal mortgage laws as leverage in bargaining with your lender. Lenders face stiff penalties for violating lending laws. They would rather negotiate a solution than get fined by the government.
- Just walk away from your home if your state laws allow this without subjecting you to a deficiency judgment against you by your lender. If you are upside down on your mortgage because you have lost substantial equity, even if you can afford to pay your mortgage, it may be the best solution. This tactic is referred to as strategic mortgage default.
- Stay in your home and not pay any mortgage payments until your home is sold by your lender at an auction sale. This allows you to save money for other living arrangements and pay down other debts such as your car payment and credit cards.
- Skip a couple mortgage payments to get your lenders attention so that that they will either reduce your loan principal or modify your loan.
Federal Laws that Lenders Must Abide by When Lending
Real Estate Settlement Procedures Act (RESPA)
RESPA law governs the types of disclosures that your lender must provide prior to closing your loan. Kickbacks and unearned fees are some of the violations that your lender may have committed. This may allow you to rescind your loan or obtain damages.
Home Ownership and Equity Protection Act (HOEPA)
This law governs against high cost refinance loans and allows the borrower to rescind and obtain money damages if a lender violates this law.
Racketeering and Corrupt Organizations (RICO)
A borrower may assert a RICO claim against their lender if the yield spread and premium were not disclosed and the premium costs were passed onto the borrower in the form of a higher interest rate when they were eligible for a lower rate. The borrower may seek damages and may be able to rescind their loan.
Equal Credit Opportunity ACT (ECOA)
These are tactics used by unscrupulous lenders to advertise a low interest rate and then switch your rate to a higher and different loan program. The borrower may obtain actual, punitive damages, equitable relief, and attorney’s fees.
Foreclosure Defense Attorney
Hiring a foreclosure defense attorney is the best way to find tactical solutions to fight foreclosure and save your home. The attorney specializes in these types of situations and can explain the laws, represent you and help you establish the best options to avoid foreclosure of your home. The attorney can advise you if your lender has violated any of the Federal lending laws, and advise you of your legal remedies.
