Foreclosure Defense Litigation

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Sometimes litigation is necessary to protect our clients’ rights and fight foreclosure. Whether borrowers bring an action as a plaintiff, are named as a defendant in a judicial foreclosure, or challenge a foreclosure in a subsequent summary proceeding, there are often several defenses that can be raised to contest a foreclosure.

Recent trends and characteristics within the mortgage industry have given borrowers and their attorneys numerous avenues of attack when challenging foreclosures. These trends include (1) pooling and securitization of mortgages, (2) widespread mismanagement of mortgage accounts and fraudulent servicing practices such as “robo-signing”, (3) use of the MERS system to avoid traditional recording requirements, and (4) the consolidation of financial institutions. Moreover, the exposure of rampant fraud and mismanagement within the mortgage industry has caused courts that once rubber-stamped foreclosures to shift their sympathies toward homeowners.

The following are some defenses that have been used to challenge foreclosures:

  • Foreclosing party does not have legal standing to initiate foreclosure because the promissory note was never transferred from the original lender.
  • Foreclosing party is not the real party in interest or a duly authorized agent of the real party in interest.
  • Foreclosing party is not in possession of the original note and cannot produce the note upon which the foreclosure is based.
  • Failure to comply with the terms and conditions of applicable pooling and servicing agreement.
  • The foreclosing party is not the lawful assignee of the note and mortgage upon which the foreclosure is based.
  • An assignment of the mortgage was invalid, because a purported agent of MERS did not actually have legal authority to execute the assignment.
  • The promissory note has been paid in full by one or more third parties as a result of the mortgage securitization process.
  • Failure to comply with the terms of the note and mortgage by charging unauthorized late fees and other charges.
  • Misapplication of the borrower’s payments contrary to the terms of the note and mortgage.
  • Failure to comply with applicable guidelines, procedures, directives, and supplemental documentation in connection with the Home Affordable Modification Program (HAMP) and related programs.
  • Violations of the Real Estate Settlement Procedures Act (RESPA).
  • Violations of the Truth in Lending Act (TILA).
  • Violations of the National Housing Act.
  • Failure to comply with the terms and conditions of applicable trust agreement or similar document.
  • Failure to comply with applicable federal and state laws related to regulation of trusts.
  • Foreclosure action is barred by the doctrine of unclean hands, based on misleading or bad faith conduct during the loan modification review process.
  • Failure to comply with the statutory requirements of Michigan’s foreclosure by advertisement statute.
  • Using the MERS system to circumvent established recording laws and creating confusion about what party has authority to enforce or modify mortgage.