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Federal Mandates that Prohibit Unfair Lending Practices

From 2007 to 2014 around 4.2 million homeowners in the U.S. lost their home due to foreclosure. Foreclosure, according to the U.S. Department of Housing and Urban Development, is a legal process wherein a creditor or mortgage lender, most often a bank, puts up for sale a loan collateral (a house) in order to recover unpaid mortgages from a borrower. The process that leads to foreclosure usually starts after three successive months of delinquency in the payment of mortgage.

There are two major types of foreclosure: judicial and non-judicial. In a judicial foreclosure, the creditor or mortgagee is required to file a case in court to start the foreclosure procedure on a homeowner’s property. The several months that it takes for this procedure to be completed, though, somehow works in the latter’s favor as this will actually give him/her the chance to raise a legal defense that may save his/her property. There are a number of foreclosure defenses that have been resorted to in the past. These defenses have helped homeowners save their property. A seasoned foreclosure defense attorney may be able to help a homeowner learn which among the following arguments will best work in his/her case:

Servicemember on active duty.

If a creditor filed a case in court to start a foreclosure on a homeowner’s property, the latter is allowed to write the court to request for a postponement of the foreclosure proceeding. Protection against mortgage foreclosure is just one of the many types of protection provided by the Servicemembers Civil Relief Act (SCRA), formerly called the Soldiers’ and Sailors’ Civil Relief Act (SSCRA), for members of the military entering active duty.

Unconscionable (unacceptable) mortgage term.

This happens when a creditor/lender takes advantage of, misguides and deceives a borrower by designing a mortgage loan contract that is actually intended to make mortgage payment impossible, giving it the opportunity to seize and foreclose upon a homeowner’s property.

State procedures were not observed by foreclosing party:

In a foreclosure procedure there are steps that the foreclosing party needs to observe, such as serving the loaner a notice of default and giving the borrower 30 days to make a payment after the notice of default has been issued. Failure to observe any of the steps required in the foreclosure procedure gives the borrower the legal right to defending against such foreclosure.

Foreclosing party cannot prove ownership of mortgage:

There are times when the foreclosing party is not able to present ownership of mortgage. This is a common case wherein a mortgage contract has been purchased by different companies, so that ownership of the contract has passed from one owner to another.

A serious mistake was committed by the Mortgage Servicer: A juridical foreclosure may be challenge based on the following mistakes by the mortgage servicer:

  • the payment you made was credited to the wrong loaner.
  • imposition of too much fees or collection of fees not approved by either owner or
  • stating an amount much higher than what you are supposed to pay.

Unfair lending practices was employed by original lender: if lenders violated any law mandated either by the state or federal government which was intended to protect borrowers from unlawful lending practices, then their the foreclosure they filed can be challenged by loaners or owners of properties. The two federal mandates that prohibit unfair lending practices are the Home Ownership and Equity Protection Act (HOEPA) and the Truth in Lending Act (TILA).

According to the law firm Gagnon, Peacock & Vereeke, P.C., “For most people, the home they live in is the most important possession they will ever own. That’s why a foreclosure on their home can be one of the most challenging experiences to go through. Not only can a foreclosure cause lasting damage to homeowners’ financial standing, but it can also deprive them and their families of the place they have called home for years. Sadly, there are far too many situations in which lenders wrongfully foreclose on a home.

Wrongful foreclosure can be an extremely difficult thing to go through, but with the help of qualified legal counsel, homeowners can fight back to protect their rights and do everything they can to keep their home.”