But which ones are the most important and will quickly put the bank on notice that there may be serious deficiencies in its lawsuit? With so many possible defenses, homeowners may rightly feel as if they will never have the time to evaluate every defense, and if they choose one with only a small penalty, the bank will still be able to take the home. Thankfully, there are a few different defenses that should be looked at first, as the issues raised by these have stronger possibilities of alerting the courts to the fact that the lawsuit does not even deserve to be considered.
The first act that homeowners should become familiar with is the Truth in Lending Act (TILA). Violations of certain requirements of TILA can result in the entire loan being rescinded, with every dime the borrowers ever paid on the mortgage returned to them, the foreclosure lawsuit thrown out and, late mortgage payments no longer reflected on the credit report. For a family who is struggling to pay their bills, having their entire down payment and every monthly payment of principal and interest returned to them can be a significant help, not to mention this will stop foreclosure in its tracks.
Violations of other requirements of TILA can also result in the bank being counter sued for monetary damages and attorneys fees. And finally, if the originating lender never provided a right of rescission to the borrowers, the loan may still be able to be rescinded. In any event, this is the federal act that homeowners should initially research and spend the most time attempting to locate violations of, as there are many requirements that lenders must meet, many of which the original loan broker may not even have been aware of.
While violations of the Truth in Lending Act only affect purchase loans, a section within TILA also provides for rescission of refinance loans. The requirements the bank must uphold on refinances are spelled out in the Home Ownership and Equity Protection Act (HOEPA). When a loan falls under HOEPA guidelines, certain disclosure rules must be complied with, in addition to disclosing affiliated business arrangements. If the lender does not meet all of the requirements, the loan may be able to be rescinded if the defense is raised during a foreclosure lawsuit.
Finally, the homeowners can research who actually owns their mortgage at the time of the lawsuit to find out if the bank suing them even has the legal right (standing) to do so. Mortgages have been traded around the industry several times and the mortgage-backed securities made out of them may have changed hands hundreds of times, or there may not have even been an actual owner assigned to the loan. If borrowers suspect that the bank suing them is not the owner of the loan, they can contest this in court and request the lender show the assignment of the mortgage and the original note. If these can not be produced, there is a good chance the bank was not properly assigned the loan and has no ability to sue for foreclosure.
If the bank meets all of the requirements under these acts and legal issues, the homeowners may have to begin digging deeper to find potential violations of federal or state law or the court process. But these three defenses, TILA, HOEPA, and determining the real party in interest, may be the easiest to research and yield the best results for borrowers who are attempting to stop the foreclosure as quickly and most efficiently as possible.
Defending a Foreclosure
Step 1: Figure Out What You Want
Step 2: Play By The Rules
Step 3: Get More Time
Step 4: Research Your Options
Step 5: Who Owns the Loan and TILA
Step 6: Have the Lawsuit Dismissed
Step 7: Answer the Complaint
Step 8: The Discovery Process
Step 9: Summary Judgment
Step 10: Go to Trial
Step 11: Lose, Win, or Appeal