What should I do if I am served with a foreclosure lawsuit?
There are many ways to attack a pending foreclosure, but time is not on your side when a lender elects to foreclose. If you have received a complaint for foreclosure from your lender, it is critical that you contact a local attorney immediately. You have 20 days to respond to a lawsuit. No matter what you do you should at least file an answer to the lawsuit. Otherwise, a default maybe entered against you. Filing an answer, will slow the legal process down so you can have time to decide on how to proceed with defending the lawsuit and it will allow you to seek a foreclosure alternative if that is how you to chose to proceed. Also, a lot of the time the paperwork attached to the lawsuit is defective in some manner or the original documents are lost, which gives rise to certain affirmative defenses. If you don't file an answer, you may lose the right to raise these defenses. For more detailed information about defending a foreclosure see this page, which includes links to several relevant articles.
What is an acceleration clause and how can it be used as a defense to my lawsuit?
An acceleration clause is part of the mortgage’s promissory note and is an important feature to understand. An acceleration clause can cause a premature foreclosure action by allowing the bank to declare the entire loan due if the property owner misses a certain number of payments on the mortgage. An acceleration clause gives the bank the right to sue for the entire sum of the loan, not just the missed payment. However, it usually requires that the property owner is given adequate notice before the acceleration cause can be utilized (this acceleration requirement is normaly set forth in writing in the mortgage and it outlines requirements for the bank to follow before it can foreclose). Most acceleration clauses are legal, valid, and enforceable stipulations. However, sometimes the banks fail to provide proper notice of accelaration, which then gives rise to a valid foreclosure defense that may lead to a dismissal of the foreclosure lawsuit. For more detailed information about defending a foreclosure see this page, which includes links to several relevant articles.
How does the foreclosure process work?
When a foreclosure occurs it is considered a lawsuit brought by the financial institution and it forces the sale of property in order to satisfy the outstanding debt. The lender will file and record in the public records a Lis Pendens, which lets everyone know that a lawsuit has been filed against the property. If a foreclosure defense it not successful or a foreclosure alternative is not found, a court will enter a Judgment setting forth the balance due on the mortgage and include the interest which has accrued. The court will then order a sale of the property. Once the property has sold, the proceeds of the sale will be used to pay the outstanding debt. However, the owner of the property usually has a right to pay off and reinstate the financial institution before the foreclosure sale in order to keep the property.
Many mortgages created within the past ten years were securitized (meaning they were bundled and sold to investors through a series of transactions) and are therefore subject to various contractual obligations in addition to State and Federal laws and regulations. One such obligation relates to the mortgage loan originator’s requirement to satisfy several procedural assignments in order for these mortgages to be properly transferred to the eventual owners of these instruments. Because in most cases these procedures were not adhered to, the mortgage foreclosure Plaintiffs are unable to legally prove ownership of the Mortgage, thereby giving rise to a defense that the Plaintiff in the foreclosure case lacks the authority to enforce the mortgage.
The best case scenario for a homeowner, is that his/her attorney trys to pursue a legal proceeding called a Quiet Title Action, the result of which, if succesful, eliminates the mortgage altogether. A quiet title action is a lawsuit to establish a party's title to real property against anyone and everyone, and thus "quiet" any challenges or claims to the title. This legal action is "brought to remove a cloud on the title" so that plaintiff and those in privity with him may forever be free of claims against the property. Please note, a quiet title action is not a guarantee and using this technique has it's risks. Therefore, consulting with an experienced foreclosure defense attorney before trying this technique is a must here.
The Basics - What is a mortgage and What is Foreclosure?
In Florida, a mortgage is a lien on property by a bank or financial institution for money that a property owner borrowed from the institution in order to pay for that property. After a mortgage is signed and approved, the property owner has the obligation to pay back the property loan plus interest. The financial institution has the right to force the sale of the property if the property owner does not pay the mortgage on time.
Foreclosure is the forced sale of a property by a financial institution. Foreclosure usually occurs when a property owner has failed to pay back his home loan to the lending institution. A home loan is also known as a mortgage and the lending institution is typically a bank. Since the property is collateral for the loan, the lending institution has the right to force the sale of the property (foreclosure) if the property owner does not pay his mortgage on time every month.
If you have defaulted on your mortgage or have been notified of foreclosure on your Broward County property, you should consult with an experienced foreclosure attorney in South Florida. A local attorney can help you understand your rights in this process, determine which options are available to you, and, if possible, help you save your home.
A foreclosure defense attorney can help you with:
- Pre-foreclosure counseling and strategies
- Default management/walkaways
- Short sales
- Loan modifications
- Deed in Lieu
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