As a last resort before beginning eviction proceedings, banks will often offer homeowners or leftover renters a cash for keys deal. Most of the time, though, these offers will be in the best interests of the bank, but will not help out the people living in the property very much.

Many banks will hire a real estate or property management agency to make the cash for keys offer. For example, t may be as little as $500 and two weeks to move out and turn over the home. Honestly, though, this is very little to a family who has just undergone a financial hardship.

Banks make these offers to persuade owners or tenants to leave a house without causing any damage. They reason that it costs less to pay people to move than to go through eviction proceedings in court and end up with a possibly severely damaged property.

So what is a homeowner or tenant to do if the cash for keys offer is ridiculously low? They should call the agency back and ask for more money and more time. Cash for keys deals are 100% negotiable, up to a certain reasonable point. Those who have been offered such a deal should keep in mind a few things about the situation.

First, if they destroy the property on their way out, because they are frustrated about the eviction, it will cost the bank a lot more to fix up the damage. Keeping previous owners and renters happy and the property in good condition is worth a bit of money to a mortgage company who has to sell that house later on the open market.

Second, if $500 isn't enough for a family, they need to determine how much really will help them. $750? $1,000? In any case, they probably should not expect to get much more than $2,000, if that. But $1,000 might pay for most moving expenses and help with a deposit on a new apartment. If they need more money, the people living in the property after foreclosure should ask for it and explain the situation to the agency.

Third, homeowners can probably get 21-30 days to move out, if they ask for it. Two weeks is a small amount of time, and probably not enough to get everything out and keep the property in great condition (hint, hint). But if the borrowers or tenants need more time than was originally offered, they can certainly ask for it and can probably get it easily.

Anyone who has been extended an offer should keep in mind that a cash for keys deal is negotiable with the agency that offered the money and the lender that owns the property now that it has been foreclosed. All of this is allowed (including extremely low offers), but negotiating for a better deal is also allowed.

The tenants should come up with what they want and need to move out peacefully, keeping the house in good condition. Then they can try and get it from the cash for keys agency. But it is important to be reasonable, as well. Any attempts to take advantage of the bank's financial resources will probably just result in the offer being rescinded and the eviction process started in court.

The lenders who own properties after foreclosure would rather pay the former owners or renters $1,000 and give them 3 weeks to move out to avoid damage to the house. But the banks would also rather evict and sell a damaged house than give foreclosure victims $5,000 and 6 months to get out. So people living in such properties need to figure out how much will help them move out and ask for a reasonable amount. They will probably be pleasantly surprised with what they can get.

Bankruptcy might help in a foreclosure situation, but the homeowners themselves are the only ones that should decide whether to file or not. They need to do do some research on how each type of bankruptcy, Chapter 7 or Chapter 13, would work in their specific situation, as well as consult with an attorney on how to file.

Chapter 7 would allow borrowers to eliminate their other debts, like credit cards, cash advance loans, and personal loans, and use the rest of their monthly income on paying their mortgage. If getting rid of the other personal and cash advance loans would help free up the monthly budget, then filing bankruptcy may be worth considering.

In a Chapter 7 bankruptcy, also have the option of including their housing debt in order to discharge the mortgage. They would not be able to keep the home, but this would stop foreclosure and the lender would just get the house without going through the entire foreclosure process. The courts would make sure that a deficiency judgment would not be possible, as well.

If homeowners file Chapter 13 bankruptcy to stop foreclosure, they will be put on a legal payment plan established by the courts to pay back the amount they are behind on the mortgage. The plan will last 3-5 years, and by the end of it, the owners will be completely caught up on the loan and any other debts that they are currently are behind on.

But all borrowers need to be careful with a bankruptcy repayment plan. It can be quite expensive, as they are required to pay their normal monthly mortgage payment, plus a portion of the total that they are behind. If their income can not sustain that, then Chapter 13 bankruptcy may not be the right decision.

But without knowing a lot more about any homeowner's circumstances that led to foreclosure, it would be hard for anyone to recommend one type of bankruptcy or another. Borrowers need to find out exactly what they can and can not afford, and possibly talk with a personal bankruptcy lawyer so they have a better idea of what to expect.

When faced with a foreclosure, the first reaction that many homeowners experience is a strong feeling of denial. Even after they have begun to miss numerous payments, they do not believe that there is any possibility of losing the home, and they hold onto an irrational hope that some miracle will fall out of the sky and save them. Unfortunately, this rarely happens, and the foreclosure continues until the borrowers are evicted.

But what if homeowners did begin to take vigorous action to keep their homes or at least delay the foreclosure for as long as they could? If this were to happen, many more people would successfully save their homes and the banks would be forced to offer more appropriate loan programs. Instead of a legal process lasting a few months, foreclosure could take years to wind its way through the courts.

The following story is a fictional representation of how homeowners could make the foreclosure just as trying and stressful for the mortgage company as it is for the owners. Simply by standing up to the lender, these borrowers are able to gain almost an extra year and a half to save up money and work on other solutions.

Peter and Nicole bought a house in 2006 for $300,000. The appraiser inflated the value of the property, which was worth only $275,000, in order to increase the commissions paid to the real estate agent and the loan broker. The mortgage broker gave the family an adjustable rate mortgage, and by the time it reset, the market had dropped.

Peter lost his job as a mid-level manager in the city's largest soap factory as the economy went into recession and profits revenues fell. Their home value has fallen to $175,000, foreclosure are rampant in their community right now, and they have paid off very little of the principal due on the mortgage loan.

Right away, when they knew that they would be unable to make their mortgage payment, Nicole called the mortgage company and asked for any solutions that were available. Their income did not allow them to qualify for a loan modification, but the lender delayed sending the loan to the attorneys for an additional two months while they attempted to work with Peter and Nicole.

Inevitably, though, the lender did send the loan to their local attorneys, who, after completing the required notices, quickly filed the foreclosure lawsuit in the courts. This was after they had missed six months of payments. The family knew the paperwork would be filed, as they were still keeping in contact with the bank, and were determined to fight the lawsuit every step of the way.

As soon as they were served with the complaint, Peter prepared a Motion for Extension of Time, requesting that the courts give him and Nicole an additional thirty days to prepare and file their answer. The bank's attorneys did not object to this motion, and the family used the extra month to research their options for solving the foreclosure and delaying the lawsuit.

After reading through the bank's complaint, Nicole believed that the lender did not actually own the loan and would have serious issues proving that it had standing to file the lawsuit in the first place. Instead of filing their answer to the foreclosure complaint, the couple filed a Motion to Dismiss the case based on this and other issues they had researched.

Filing the motion and serving it on the bank's attorneys gave the lender another fifteen days to respond to the motion, which they did on day 14. A hearing in front of the judge for the Motion to Dismiss was scheduled ten weeks in advance, which gave the family an extra two and a half months to keep working on their answer to the lawsuit, save money, and apply for other jobs and solutions to foreclosure.

At the hearing, the bank was able to argue to the judge that the lawsuit should be allowed to proceed and it established that it had enough legal standing to sue the homeowners. The judge denied Peter and Nicole's Motion to Dismiss and told them they would need to file their answer with the Clerk of Court, which they did a few days later.

Along with filing the answer to the complaint, the couple began serving discovery documents on the bank, title company, original mortgage broker, original lender, real estate agent, appraiser, and any other party whom they believed had information that could help their case. This process began to drag on for many months, as the couple had to compel the lender to answer questions and subpoena other witnesses to produce documents and information about the loan.

The lender, in the meantime, filed a Motion for Summary Judgment in the case, hoping that it could eliminate the homeowners' arguments and win the case without it going to trial. The homeowners filed their arguments in response to this, and a hearing in front of the judge was set for several months down the road. Eventually, the bank's motion was denied and Peter and Nicole were allowed to keep defending their home.

By this time, Peter had found a new full time job at a reasonable salary that would allow the family to keep on top of a housing payment. They were already over a year behind in their original mortgage and the lawsuit had not even come close to going to trial yet. Instead of trying to keep paying their mortgage, all the money that they could have paid to the lender was being put into savings.

In fact, the couple did not even want to keep defending this home, as they simply wanted to move on with their lives on their own terms. Now they had found a new house to rent and were ready to begin negotiating a final solution with the lender. They called the lender's attorneys and offered the bank a deed in lieu of foreclosure, in exchange for no deficiency judgment and both parties giving up the lawsuit.

At this point, the bank was finally willing to negotiate a settlement, take the property back, and cut its losses on the loan. After paying attorney fees for almost a year and a half, the mortgage company did want the case to go to trial, which would have cost them even more time and money.

Although the homeowners did not go through with the entire legal process and defend against the foreclosure in a trial, they were able to leave the home on their own terms and save up money while they were giving the mortgage company a hard time in court. But that is their right, and they were able to negotiate a solution even without having their "day in court" in front of a jury.

Once the bank accepted the deed in lieu, Peter and Nicole were able to stop foreclosure for good, not worry about being sued afterward, and moved out of their home and into a much more affordable lease. They had enough to pay six months of rent up front and avoided an embarrassing credit check. The bank took the house and listed it for sale, selling it a few months later to a new family.

For many homeowners who retreat into fear and anxiety once they begin missing mortgage payments, the process the bank follows to foreclose on the home can be surprisingly short. In fact, in just a few short months, borrowers can go from being delinquent on the mortgage to being sued to having their home auctioned off to being evicted by the bank or new owner afterward.

The following story is how a typical foreclosure in a judicial state (requiring a judgment for foreclosure) may proceed. It assumes that the family in the fictional story do nothing to save their home or defend against the foreclosure in court to try and buy more time.

John and Mary bought their home in 2006 for $250,000, at the top of the real estate market in their neighborhood. They put no money down because they had good enough credit to qualify for a 100% LTV subprime mortgage. Since then, the house has declined in value, like all of the homes in their neighborhood, and was recently appraised at $175,000.

They have paid off essentially none of the balance owed on the mortgage, and just recently John lost his job in a plastics mold manufacturing plant. He has found a temporary position, but instead of making $60,000 a year, now he is lucky to make $300 a week. Mary has taken up a part time job, as well, but her income is even less than John's, and they will be unable to afford their mortgage payment any longer.

Inevitably, John and Mary begin missing payments on the mortgage and their other bills, although they do not hear from the bank until three months have passed. Because they live in a judicial foreclosure state, their lender sends them a notice stating that, if they do not pay back the arrears within 30 days or make other arrangements, legal foreclosure proceedings will be initiated.

John and Mary do not respond to this letter, nor to any of the daily calls from the collections department of the bank. They assume that they will be humiliated and pressured into making a payment they can not afford, and they need every penny they are currently making to pay for food and utilities. So they do not contact the bank for workout solutions, and the bank takes the next step.

After the thirty days have gone by, the lender sends out a 10 day notice to foreclose on the home, and refers the loan to its local attorneys in that state. A few weeks later, the lawsuit is filed in the county court, and John and Mary receive a copy of a summons and complaint, giving them 30 days to file their answer.

Although the family consults an attorney about defending the foreclosure in court, they decide not to pursue this option due to the high cost and unlikely outcome of winning the lawsuit. Rather than hire an attorney or defend the foreclosure on their own, John and Mary decide that they will not answer the complaint and hope that something better comes their way.

But nothing better comes, and the bank requests the court to grant it a default judgment and order that the home be auctioned off at the next county sheriff sale. Since John and Mary did not file an answer, the judge grants the bank's motion for default judgment and the house is listed for sale. The lender sends the family a copy of the judgment and notice of sale, giving them until the date of the auction to pay off the total amount due.

The next month, the house is auctioned on the county courthouse by the sheriff's department, although no one purchases the home. Ownership reverts back to the foreclosing lender, which is the only party to bid on the property. The entire foreclosure process takes about 100 days from the time of the first notice until the bank takes back ownership.

Within days after the home is auctioned, the sale is confirmed by the court and the bank's attorneys request that the homeowners and any remaining personal items in the house be removed. The judge grants this order, and a 3 day eviction notice is posted on the property by a sheriff's deputy within a few days, to the shock, horror, and surprise of John and Mary, who thought they would be given more notice if they were to be forced out.

At this point, John and Mary have taken no specific action to save their home and are now in danger of being forcefully evicted from the property within 72 hours of receiving notice. Because they did nothing to stop foreclosure or delay the lawsuit from progressing, they have only had a little over three months to save up money to move. This is not enough to find an apartment, and the family must move in with relatives until they can afford a new place.

Merry Christmas!

From everyone at ForeclosureFish.com

Sometimes, despite the fact that homeowners have done nearly everything in their power to avoid losing a home to foreclosure, the bank simply outspends them and breaks down their resistances. Lenders are aggressive when defending against claims of predatory lending or otherwise taking advantage of borrowers, and courts have typically been willing to rule against the owners and in favor of banks. But when homeowners have run out of options on their own home, the best action may just be to alert others that the mortgage company may be running a scam.

Federal and state regulatory agencies rarely go after the largest banks or mortgage companies, unless there is an economy-wide scandal or especially egregious acts of preying upon consumers. But even then, it is more likely that banks and large lenders will not be targeted directly. The consequences for regulators in going after these giant corporations are far too great, as the largest financial institutions in the country bankroll the state and federal governments.

Take the cases of Countrywide and the governor of Illinois, Rod Blagojevich. Countrywide had been making subprime loans for years to borrowers who could never hope to pay them back. But few states ever looked into the bank's lending practices until the subprime mortgage market collapsed and the foreclosure crisis began to create a drag on the national economy. Then states began investigations and lawsuits against the company, but it was already almost too late, as the company had sold itself to Bank of America. Why did the states wait so long to address obvious predatory lending?

And the governor of Illinois was just recently arrested for attempting to sell the US Senate seat left vacant by president-elect Barack Obama. Curiously, the arrest came less than 24 hours after Blagojevich ordered state agencies not to do business with Bank of America any longer. Of course, this may answer the question of why other states waited so long to investigate Countrywide until after it had collapsed and been eaten up by a larger lender.

Thus, it may be wishful thinking to expect that homeowners who have lost a home to foreclosure can find any real justice with regulatory agencies. The most they can probably hope for is that the agencies allow other potential customers of these companies to search for previous complaints and determine which lenders to stay away from. In any case, however, homeowners who believe they were unfairly taken advantage of should pursue filing complaints in order to warn regulators of predatory activity and alert other borrowers to problems with mortgage companies.

Homeowners also need to know which regulatory agencies they should contact for particular types of banks. The following list should be referred to as a rough guide and will cover most, if not all, of the types of lending institutions the typical borrower will have any kind of mortgage transaction with, as well as which agency to submit a complaint to, if the need arises.

• National Bank: Office of the Comptroller of the Currency


• Federally Insured Savings and Loan: Office of Thrift Supervision


• Federal Savings Bank: Office of Thrift Supervision


• State-Chartered Savings Institution, Federally Insured: Office of Thrift Supervision


• Federal Credit Union: National Credit Union Administration


• State-Chartered Credit Union, Federally Insured: State Credit Union Agency, Federal Trade Commission


• State-Chartered Credit Union, not Federally Insured: State Credit Union Agency, Federal Trade Commission


• State-Chartered Bank or Savings Institution, Not Federally Insured: State Banking Agency, Federal Trade Commission


• State-Chartered Bank, Not Member of Federal Reserve System, Federally Insured: State Banking Agency, Federal Deposit Insurance Commission


• State-Charted Bank, Member of Federal Reserve System: State Banking Agency, Federal Reserve Board

Any type of lender that is not on the above list and that homeowners want to submit a complaint about should contact the appropriate state agency. If one is not available, the state attorney general or state banking department should be contacted. In fact, the state attorney general can be sent a copy of the complaint for any of the above-listed lending institutions, as the states do have the right to investigate banks or mortgage companies doing business in their territories.

Again, homeowners who have lost a house to foreclosure may be disappointed if they believe any regulatory agency will come to their rescue, put the lender out of business, and give them their home back. This will not happen. But borrowers who feel they were taken advantage of may wish to keep a record of their complaint with the appropriate agency; after all, when enough people complain about a company, there will be no other option than to investigate it and shut it down.

Even when homeowners are negotiating with their bank, they are often surprised to find that they are still getting collection calls from customer service representatives threatening foreclosure. It seems a bit contradictory that a lender would both put the foreclosure on hold to negotiate, but still call and threaten borrowers with the loss of their homes if they do not get the payments back on track.

The bank will not threaten foreclosure just because homeowners are negotiating for a loan modification or other solution to the problem. The negotiation process is not why they would mention foreclosure as one of their potential options if the workout agreement fails to go through. There are reasons, though, why the bank would keep threatening to foreclose even while negotiating with owners.

In fact, the lender can and will continue to threaten foreclosure if borrowers are behind on their mortgage payments. Even if they had just missed their first month, they could probably expect collection calls to start coming in with bank representatives threatening foreclosure if the borrowers do not pay up in time. If they later are approved for the modification program, the collection calls will cease, but if the owners are turned down then the foreclosure will proceed.

Most homeowners would be doing the right thing, though, in keeping in contact with the bank and attempting to qualify for a loan modification or any other of the bank's programs to stop foreclosure. Banks do not always approve loan mods, but it is better to try to qualify for this option than just lose the home or pursue options with other companies, of course.

When homeowners are in the middle of negotiating with the mortgage company, then the bank has not approved any final program yet and the owners are still behind on the regular monthly payments. So the lender will keep threatening foreclosure until the mortgage modification goes through and the borrowers begin making the required payments on the plan.

Until the modification is approved, accepted, and homeowners have begun making payments on it, foreclosure is an option for the lender. But borrowers should not worry too much about the bank's threats, as long as they are still moving ahead with the negotiation process. Keeping in touch with their representative at the bank and keeping on top of the foreclosure lawsuit process will help them avoid any surprises, like a judgment being ordered or a sheriff sale scheduled.

However, homeowners do need to make sure they know exactly where they are in the process of negotiating with the bank, to be on the safe side if anything goes wrong. There are far too many instances of borrowers thinking they were applying for a modification when, in fact, the bank had already turned it down and was moving towards foreclosure.

It is usually after about three missed mortgage payments that the bank will file the foreclosure lawsuit on a home. Soon after this point, homeowners will be served with the paperwork via certified mail or a sheriff's deputy leaving a copy of the complaint at the property. But the foreclosure process is full of complicated legal procedures and a lot of different factors can influence these to change when borrowers would receive the notice of the bank's lawsuit against their home.

First of all, federal and state foreclosure law has a huge role to play in determining how the bank pursues the foreclosure on the house. There may even be a period before the suit can be filed in which the bank has to work with the homeowners, which causes the bank to wait extra months before filing the suit. Also, local notice requirements may force the bank to publish the impending foreclosure in local papers for weeks before they begin the legal process in the county court.

Second, homeowners' efforts to defend their home will also greatly influence how quickly the bank files the foreclosure lawsuit. If they are keeping in contact with the lender and attempting to qualify for a loan modification, forbearance agreement or other solution with the lender or another company, the bank may be willing to give the borrowers more time to save their house. In this case, the lender may wait several extra months before turning the case over to their attorneys for the lawsuit to move ahead and notice to be served on the defendants.

Homeowners can also simply ask the lender to give them more time before it begins lawsuit proceedings to take the house back. Borrowers can just call the mortgage company, explain the situation that put them behind in payments, ask for additional time, and put their request in writing to the bank via fax or certified mail. More often than homeowners would believe, the bank will just hold off on filing foreclosure against the home to give the borrowers more time to come up with a solution on their own.

Third, the bank's own resources and competence level will influence how quickly it files the lawsuit. If homeowners are dealing with a huge, national bank that is attempting to handle a large amount of foreclosures, the company may be way behind on everything. This is a mixed blessing, of course, as the lender will be behind on filing the lawsuit, but it may also be difficult to get hold of if the borrowers do have a solution and need information from the mortgage company (such as payoff figures) to complete it.

Borrowers should also remember that simply defending the lawsuit in court can drag out the foreclosure process by several months or even years if the case goes to a trial. But homeowners could file a few motions before filing their formal answer to the bank's complaint and give themselves an extra half a year to stay in the house mortgage-free while they either negotiate with the bank or find other solutions. Receiving notice of a foreclosure lawsuit or the lawsuit itself can be delayed for long periods of time while the bank has to accept not being paid and the borrowers can work on other solutions.

In many counties, sheriff sales seem to be scheduled, canceled, and rescheduled numerous times before a home is finally sold. There are a number of reasons why a foreclosure auction may be canceled. Not all of them will result in a new sheriff sale being scheduled, but the best bet to find out when the next sale will be held is simply to call the county courthouse or the sheriff's department and ask them. When a sale is postponed, it is often rescheduled immediately for the next month.

Homeowners facing foreclosure on a house may convince a bank to delay a sheriff sale quite easily. If they are working on selling, refinancing, or loss mitigation, and they have a reasonable offer for the lender, it may accept and decide to hold off on the sale. Getting a one month extension on an auction is very easy for most homeowners and almost automatically approved by mortgage companies. Borrowers can even do this multiple times if the solution they are working on takes longer than expected.

The bank (the plaintiff in the lawsuit) may also voluntarily cancel a sale if the homeowners have already cured the foreclosure completely. If the borrowers pay back what they owe the lender, agree to a mortgage modification, sell the house, or pay off the loan and judgment through refinancing with a foreclosure lender, the bank has no more claim and the auction must be canceled. In this case, there would be no future sale date, unless the owners fell back into foreclosure at some later date. But then the entire legal process would have to start from the beginning.

Filing bankruptcy will also stop a sheriff sale immediately as soon as it is filed and the bank and county court are made aware of it. The automatic stay that goes into effect when a new bankruptcy is filed prohibits the mortgage company from any further collection activities, including selling the house at a foreclosure auction. The lender has to cancel the sale or have it reversed afterward if the bankruptcy is not known about until after the auction, and it is easier to cancel it beforehand.

Homeowners can also defend a foreclosure lawsuit and ask the courts to delay the sheriff sale. There are motions that the borrowers can file that will temporarily restrain the plaintiff from selling the house until the motion can be heard and ruled upon by the judge. This can get the homeowners an extra month or two before the courts schedule the motion for a hearing, during which time the bank can not sell the home. But this is somewhat rare, and it is easier to delay judgment on the lawsuit itself by defenses in court, rather than have the auction delayed after the fact.

In any event, many times the delay of the sale will only be for a month or two at the most. Banks do not want to push an auction back for several months at a time, since the homeowners may simply give up and abandon the home. If sales are held on the third Thursday of the month, the new auction will most likely be the next third Thursday. Most counties hold sheriff sales on predetermined dates, so it may be quite easy to find out when the property is scheduled for sale again. But it is also a good idea to call the county to make sure.

If you have an uncollected judgment against you from a previous foreclosure, credit card, car loan, personal loan, or similar situation, then whichever collection agency owns the debt can try to collect. Determining that they own the debt and have the right to collect it from you is quite a bit more difficult than it would appear. But of course, this problem does little to prevent collection agencies from calling all day.

The best you can try and do is tell them not to call you anymore. They will have to abide by your demand not to be called, as that is a federal law. The Fair Debt Collection Practices Act states that any communication with a debtor made after the collection agency has been told not to send further communication will be a violation of the Act.

You can also try and have the judgment vacated (or reversed, voided) through the original court. If you were never served with the lawsuit paperwork, then you may have a defense. If the plaintiff violated laws to get the judgment against you, you may have another defense. If the collection agency keeps contacting you after you tell them not to, you may have even another defense.

Of course, depending on the court, the judge, and the collection agency's attorneys, this may go nowhere and you will just be shot down and the motion to vacate denied. But it costs almost nothing to file the motion and you might get lucky and have the judgment voided immediately. Tactics such as these will also show the collection agency that you are serious about defending the debt and it may cost them more to pursue you than they can ever hope to collect.

If you have a judgment against you or just a lot of debts in collections, you should start by researching your options to settle debt, validate debt, and have the judgment vacated. Applicable federal laws are the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (FCRA). Look them up, read some plain-English explanations for them, and see what your options are. These laws may also be used as defenses in an effort to stop foreclosure, depending on the circumstances of the case.

But to begin with you can tell the collection agency right away that you do not want to receive calls from them all day anymore. The company will have to stop calling you, or run the risk of being sued themselves. And they would not want you filing complaints with the state attorney general and the Federal Trade Commission (FTC) for harassment, would they?

Contrary to popular opinion, you do not have to take a foreclosure, credit card judgment, medical bills, other collection attempts, harassing phone calls, and an illegitimate debt lying down. Defend them, make the creditor prove that it owns that debt and is owed that debt, and make it as huge a problem for them to deal with you as you are having dealing with them. When collection agencies know that it will cost them more to go after you than they can hope to receive, they may be willing to settle with you or give up.

Foreclosure seems to be a straight-forward enough procedure. Homeowners take out a loan and then fail to pay, so the bank gets the house. But it is treated as a breach of contract case in the courts. If the homeowners have an agreement to pay a mortgage company a certain amount of money every month to decrease the amount of a loan, and then fail to uphold their end of the agreement by defaulting on the payments, the foreclosure is the legal remedy the bank has to take the home to pay off the debt.

But this breach of contract issue works in both ways. Lenders also have to uphold their end of the mortgage contract and can not have a home sold at sheriff sale if they are also in breach of the contract or have violated lending laws. There are so many state and federal laws to follow that it is quite conceivable that both the bank and homeowners have voided the contract by failing to follow it as agreed. In fact, it may be the bank that violates it first but the owners have no real incentive to sue the bank until they are being sued for foreclosure themselves.

However, only the bank quickly goes into court to try and have the contract enforced, which makes it look like mortgage companies are the victims of deadbeat borrowers. After all, homeowners do not watch the mortgage contract like hawks and sue the lender at the first sign of a violation or breach of the contract. Maybe they should. But lenders are rarely taken advantage of by borrowers, as just as many banks fail to meet their requirements under the contract and applicable laws as homeowners fall behind due to hardships or other reasons.

If homeowners have failed to keep up their end of the mortgage agreement and banks have met all of their requirements, then foreclosure should be allowed to proceed. It liquidates the bad debt off the balance sheet of the banks and allows them to recoup some of their losses by selling the home either through a sheriff sale or on the open market later on. Unfortunately, this may be a rare case, since banks do not even provide any consideration to make the mortgage contract valid in the first place.

But if the bank has also failed to keep up its end of the bargain, then homeowners should defend the foreclosure in court or with the assistance of regulatory agencies at the federal and state levels and attempt to stop foreclosure. If the lender fails to follow the law and the loan agreement, then the homeowners have no further obligation to pay anyway -- the contract has already been breached by the bank and foreclosure is not an option if the owners later default on the payments.

For homeowners who are not attempting to stop foreclosure but only get enough time to move out and give the house back to the bank, a deed in lieu of foreclosure may be the best option. But even then, it may also be in the best interests of the borrowers to fight the foreclosure in court to persuade the bank to negotiate.

Homeowners, as soon as the bank has begun foreclosure filings, can start filing their own motions in court just to get more time to have the lawsuit pushed back. It may be a huge mistake to allow the bank just to get a default win in court because the owners are too anxious and fail to show up for hearings or file an answer to the complaint in the first place.

For most foreclosure victims, doing the minimum amount of work to defend the lawsuit and stop foreclosure will show the bank that they are not willing to be kicked out of the house quickly and easily. Just going into court to defend the foreclosure can drag out the lawsuit potentially for months or even years.

While the lawsuit is languishing in the county court system, borrowers can then try to work with the bank to execute a deed in lieu of foreclosure to help them preserve at least a little bit of their credit. But they should not let the bank dictate all of the terms and how much time is available to get the deed in lieu done. Homeowners can use a defense against the lawsuit to force the bank to negotiate more beneficial terms.

Otherwise, the lender may just take its time reviewing the deed in lieu, and the house will be foreclosed and sold at sheriff sale. At the last minute, the borrowers may be told the mortgage company will not be accepting the deed in lieu and the house will instead be auctioned off. This is the result every homeowner dreads, but it is far too common for banks to turn down requests for help at the last minute.

There are even just a few little motions that homeowners could file in court and find explanations for online. A Motion for Extension of Time might give them an extra 30 days to file an answer to the complaint. A Motion to Dismiss might give them several extra months until the motion can be ruled upon and either granted or dismissed.

By the time these two motions have taken up valuable months, the bank will know that the owners are serious about finding a solution either in or out of the courts. The judge in the case can even order the bank to try and work with borrowers to stop foreclosure and keep the lawsuit from going to a trial (foreclosure lawsuits rarely go to trial).

That loan modification homeowners do not qualify for right now may look a lot more inviting to the bank if they are defending the lawsuit and looking at a two or three year legal process before they can take the home. That could be several years of mortgage-free living for homeowners and just as many years of legal fees and losses on the loan for the mortgage company.

Homeowners should look into their legal options as well as their non-legal options for avoiding foreclosure. Stopping the lawsuit in court or getting additional time is the best solution to begin with. Borrowers are encouraged to consult with a lawyer if they feel the need to; even spending $1,000 on an attorney would be worthwhile if they received an additional 6 months to work out another solution to foreclosure without having to pay the mortgage.

Every news program seems to represent the foreclosure crisis in America with African American families being evicted or block after block of empty homes in lower-class Detroit neighborhoods. These images, though, do not represent how foreclosure is affecting Americans of all ethnic groups, and it is not mainly minorities who are losing homes.

To be sure, minorities like African Americans and Latin Americans were given subprime mortgages in higher proportions than the rest of America, for a number of legitimate and discriminatory reasons. It was in the subrpime mortgage segment of the housing market that the foreclosure crisis started in.

But the largest ethnic group of Americans are white, so the largest number of foreclosures are happening in white neighborhoods across the country. No large housing market was spared from the glut of cheap money and loans for people who could never pay them back. Upper middle class areas of California are not usually considered predominantly African American communities. Foreclosure is happening everywhere.

The news media, though, often represent the foreclosure crisis with footage of lower class blacks losing their homes and being evicted from obviously run-down properties. The subtle message for other ethnic groups is that this helps them feel better about their own situation, since only black homeowners are mostly in foreclosure and that it is not a problem affecting most Americans.

Really, though, these types of representations of the foreclosure crisis do nothing but set up a false perception that it is "other people" in "low-status neighborhoods" who lose homes. As the media seems to see the crisis, if it is mostly blacks in street clothes being evicted, there is little incentive to propose any real solutions to help these homeowners.

Contrast these images with those of predominantly white Wall Street and auto executives dressed in fancy suits begging for bailouts in front of a predominantly white Congress. The representations of each group in crisis (black homeowners vs. white executives) sets up the perception the news media are trying to convey to all the rest of us. "Look how important these old, rich white guys are -- they obviously need our help and support more than the poor black folks," is the nonverbal message.

But foreclosure and economic calamity is spread out throughout all ethnic groups because of the actions of these corporations working with government. It is true that minorities are suffering just a little bit more from foreclosure, but not out of all proportion. The main difference is how the news media portray and contrast the problems of homeowners and corporate executives by using false low-status and high-status images.

If members of Congress are watching the news, or taking campaign contributions from news organizations, or in charge of regulating the national air waves, it should be no wonder why the rich guys get to steal $700 billion from the poor folks.

Once a foreclosure case has gone to trial, there are really only three possibilities left. Either the case will be decided in favor of the lender and the foreclosure allowed to continue, the case will be dismissed and the lender forced to begin the foreclosure all over again or not allowed to do so, or one party or the other will attempt to file an appeal with a higher court.

Mortgage companies will often not be able to win a foreclosure lawsuit based on the merits of the case due to the near impossibility of following all of the rules and laws that govern mortgage lending. And if homeowners press hard enough, the entire complaint against them will typically fall apart. So the bank's attorneys will most likely have to rely upon mistakes made by the borrowers themselves in following the court rules.

When this happens, corrupt judges and corrupt attorneys can work together to force homeowners defending themselves out of the court system and justify it with confusing legal language or one-sided rationalizations. Borrowers who do not have years of legal training from a state-approved law school will find it difficult to convey their messages and will often be ignored or marginalized while the court and attorneys work against them.

But in some lawsuits, the bank may just have made so many egregious errors that it is impossible not to award judgment to the homeowners. In such cases, it is important for the borrowers to determine if the complaint has been thrown out with or without prejudice, because this difference will determine if the bank is able to begin the lawsuit again or if it is barred from beginning another lawsuit to force foreclosure of the house.

A dismissal without prejudice of the bank's lawsuit means that the lender can re-file the case once it has fixed the errors in the original case. If the case was dismissed due to the bank not following state pre-foreclosure notice procedures, the lender may be able to follow them correctly and throw the house back into foreclosure. But when cases are filed with prejudice, the lender may not bring the case back into that court.

If either party believes that the court made serious errors in deciding the case or allowed for gross violations of rules or law, it may be worth filing an appeal. Of course, if the bank loses its case, it will most likely appeal because it does not want to lose all of the money it has already put into the lawsuit and it has more to gain from doing whatever possible to take the house.

But homeowners deciding to appeal face a more difficult choice. On the one hand, if all they were doing was buying time and have found a solution to foreclosure, it may not be worth the expense and trouble of appealing. At this point, moving on with their lives may be best if they have put up a defense and simply lost to the bank, especially if winning the case was not the primary purpose.

On the other hand, if homeowners are aware of violations of the rules in favor of the bank and wish to drag out the foreclosure process even longer, filing an appeal may be the way to go. Appeals must be filed in strict accordance with the Appellate Court, so more rules of procedure will have to be printed out and followed. But this process can take additional years and homeowners can request a restraining order against the bank from taking any other foreclosure actions until the case has been reviewed.

If a foreclosure case actually makes it all the way through the legal process and goes to a trial and is decided upon by a judge or jury, homeowners can rest assure that they have done nearly everything in their power to stop foreclosure and drag the process out for as long as possible. It is at this point that they will have to decide where to go next, either to appeal or not, depending on the outcome of the lawsuit.

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

Of all the steps in defending a foreclosure in court, actually going to trial to argue and win a case may seem the most stressful to the average homeowner. But depending on how much care and preparation has gone into their defense to the bank's positions and their own claims against the lender, the trial may proceed much easier than they expect.

But in fact, most cases never even get to the trial stage of the legal process and all of the research and preparation serves to force the parties to compromise and set up some sort of mutually beneficial agreement. Lawsuits are either thrown out of court for one reason or another, ruled in favor of one party by summary judgment, or the plaintiff and defendant get together to work out a solution like mortgage modification that does not involve the court. This is almost always a better solution than the judge would be able to rule on anyway.

It is worth remembering that most of the work done by homeowners will be focused on shooting down at least one element of the bank's case, and this is what the defense will focus upon. In the case of foreclosure, this will be a breach of (mortgage) contract case, and the bank will have to prove four elements. These are the following:

• A legally binding contract existed between the parties.
• The lender did everything required under the contract.
• The borrowers failed to meet the requirements of the contract.
• The borrowers' breach of contract caused the bank actual damages.

In their initial complaint, the bank does not have to state what the elements are of the position they are relying upon. This leaves is up to the homeowners to determine the elements and begin trying to disprove each of them. But borrowers have a lot of material to work with in disproving these elements of the case, and all they have to do is create enough doubt in the judge's or jury's minds to prevent a ruling in favor of the mortgage company.

There will be a lot of methods homeowners may use to disprove the bank's positions, much of which are beyond the scope of a single article. Impeaching witnesses by pointing out bias, the impaired ability to observe the facts, and prior inconsistent statements is a start in knocking down any witnesses the bank brings. The bank may attempt to bring in witnesses to convince the decision makers that homeowners should lose their houses, despite any laws violated by the bank in the first place or even a predatory lending situation.

There are also numerous tools that can be used in the courtroom that follow the standard structure of a lawsuit. Homeowners should research how direct examination, cross examination, exhibits, making and responding to objections, witnesses and expert witnesses, opening statements, and closing arguments will fit into their case. Homeowners can use these tactics, as well as see them used against the borrowers by the mortgage company, so it is important to understand how they fit into the overall trial.

This is the part of the entire legal defense to foreclosure process where homeowners may wish to consult with an attorney, either to represent their case in court or simply to provide an awareness of how the trial will work. Both of these options will cost money, of course, but they can help prevent a home from being sent to a quick foreclosure because trial rules were not followed. The value of high-quality, relevant legal advice simply can not be overstated.

Homeowners, though, can try and defend the case on their own and have been successful in the past in doing so. Thus, there is simply no reason to become stressful at the though of arguing a case in court designed to stop foreclosure for good. After all, the case will most likely be settled long before the trial, and homeowners who do defend their foreclosure are much more likely to win or get a draw than those who simply give up on saving their homes and allow the bank to get a quick victory.

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

With all of the new federal and state programs created across the country to address the foreclosure crisis, it is time for our foreclosure laws section to be updated.

The new section of the website will contain both federal and state law discussions, as well as an examination of how homeowners can defend a foreclosure in court. This will be an indispensable resource both for borrowers and a guide for attorneys who are assisting in a defense and find a need to refer to the actual foreclosure laws.

Keep an eye on this website and our other ForeclosureFish site over the next few weeks, because exciting new changes are on their way!

Some time during the process of defending a foreclosure in the court system, homeowners may cause the bank to file a Motion for Summary Judgment. This requests the court to forget about the trial and borrowers' case against the lender and simply award the foreclosure judgment to the bank. In effect, this motion states that there are no issues worth the judge's time to examine and that it would be much easier if the bank simply won the lawsuit and got to take the home.

Obviously, such a motion being decided in the mortgage company's favor would have a severely negative impact on the homeowners' efforts to save their home by knocking down the bank's lawsuit. But the bank or its attorneys may realize that they really do not have a strong case to have the property sold to satisfy the loan and will simply declare all of the defenses frivolous and not worth the court's time.

This tactic is almost always used by the lender sometime after the homeowners file the answer to the complaint but before a trial is set, in the hopes that the case will not have to go to trial at all. The bank and the attorneys know that having a judge find some way to ignore the defenses and simply get on with the foreclosure will be much easier than attempting to convince a jury of fellow homeowners that the bank should be awarded the property even though its case is shaky or nonexistent.

Homeowners who are forced to defend against a Motion for Summary Judgment filed by the bank are immediately put into a difficult situation. They must both argue to the court why the bank's motion should be denied and show other relevant cases to support their positions. The courts must be shown that there are genuine issues of material fact that must be decided upon before any judgment can be reached in the case and that a summary judgment would be in error.

However, borrowers can also file their own Motion for Summary Judgment if they believe the bank has no real case to argue for foreclosure of the mortgage. This can be due to violations of the Truth in Lending Act (TILA), an incorrect notice of rescission, or virtually any other reason that the bank should be disqualified from pursuing the lawsuit. Homeowners should be aware of this legal tactic to request the court throw out the lender's case due to a clear deficiency in its ability to sue.

If neither party files a Motion for Summary Judgment or all such motions are denied, the case will then go to a trial, either before a judge or a jury. Thus, this is the last chance for the bank to shoot for an easy win, as well as the homeowners' final opportunity in stopping foreclosure in the court to have the case thrown out before a trial. But if the homeowners have established a solid defense up to this point and answered the complaint effectively, there will be little chance the lender will be granted such a quick and easy foreclosure.

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

There are lots of reasons for the foreclosure rates in the US, but the one most cited by armchair real estate market experts is that too many people took out loans that they knew they would never be able to afford. While this undoubtedly happened throughout the country, it is just one part of the problem that is being contributed to by many factors.

In fact, the entire foreclosure crisis was not caused because stupid people got stupid loans from stupid mortgage brokers with money provided by stupid Wall Street investment firms (although a lot of that did happen). Nearly everyone who had any role in a housing transaction, from the buyers to the sellers to the mortgage broker to the title company to the real estate agent to the appraiser to the Wall Street firms to the government to the Federal Reserve, did whatever they could to pump up values just a little bit further.

So blaming the bubble and the collapse just on borrowers whose eyes for property were bigger than their pockets is a mistake. Without the roles played by every other individual and private or public organization, the housing market could not have been pumped up to such dizzying heights. Unfortunately, though, homeowners are the ones suffering most directly from the meltdown.

Some homeowners were told they were getting a fixed rate loan and did not know the payment would go higher. It seemed like everyone was approved for a low, fixed rate mortgage when they applied for the loan, only to find out at the closing that it was adjustable. And these were the lucky ones who realized it at the closing of the loan, rather than three years later when the payment adjusted automatically and it was suddenly impossible to afford.

Some families bought a new home at the top of the market and just do not want to pay tens of thousands more on the loan than their house is worth now that prices have crashed. In some areas, they may owe more than $100,000 on the loan than the property is currently valued, which gives them very little incentive to keep paying the mortgage. In such cases, a hit to the credit report due to foreclosure is inexpensive compared to paying the principal and interest of a loan on the house that is underwater.

Some borrowers have lost jobs over the past year, with even more losing them every day as the economy slows further and further. With a huge drop in their monthly income, these homeowners could not afford any payment, no matter how low. Factor in that they have to finance their share of the Wall Street and auto industry bailouts, and keeping out of or stopping foreclosure will be the last thing they can afford.

In reality, people routinely just have life happen to them. They get sick, or get divorced, or lose a job, or go out of business, and this will always cause foreclosures. The mortgage industry has always expected a certain percentage of loans that are made to default. The big difference during the boom was how much money poured into the housing market and how far lending standards fell to accommodate the new borrowers who were attempting to enter the market, despite the fact that they had poor credit and no assets or stable income.

Although it may make people feel better to blame the foreclosure crisis on its victims, the situation is more complex than that. It has been a combination of a lot of factors that have driven the foreclosure rates so high in the country and kept them at record levels for years now. The people who took out loans they could not afford just to get a big house are part of the problem, but many more issues contributed even more to the problem and set up the market for this failure.

At any time after the lawsuit is filed, homeowners can begin the process of obtaining information from the bank regarding the mortgage and the foreclosure. In the courts, this is known as "discovery," and can be used by either side to produce documents and determine which issues are at stake in the lawsuit. This process will also give borrowers more information on what defenses to raise, as they can begin it as soon as they have been served with the paperwork, and how best to argue the case if it goes to a trial.

There are a number of tools that borrowers can use to begin gathering information directly from the bank or other third parties, including the mortgage broker, real estate agent, servicing company, and originating lender. The most commonly used of these are depositions (either oral or written), interrogatories, requests for admission, and requests for the production of documents.

A request for the production of documents is self-explanatory and can be used by homeowners to force the bank to produce the original note or mortgage to verify that it has the legal standing to begin a foreclosure lawsuit. Other documents can also be requested, either directly from the lender or from third parties; some of these might include the sales contract from the real estate agent, closing documents from the title company, an invoice of the appraisal, and so on.

Third parties may also have to be subpoenaed to make them provide the requested information, but they can be a source of important information in raising a foreclosure defense. The court does not need copies of actual discovery requests that borrowers or the lenders make to each other, but they may require that a notice be filed that discovery requests have been fulfilled.

Interrogatories are questions or direct statements that one party asks of the other and can relate to almost anything in regards to the loan. Homeowners should note that this type of discovery can only be sent to parties to the lawsuit, which means anyone suing or being sued. So, it would not be possible to serve them on the mortgage broker or title company unless they are brought into the lawsuit. Also, the Federal Rules of Civil Procedure also limit interrogatory questions to 25 total so it is important to decide on the most important information to get from the mortgage company.

Typically, interrogatory materials begin with a list of definitions so each side is clear on what the other is referring to when using certain words or phrases and will force the bank not to fall back on the position that the homeowners' interrogatories were too vague to respond to. If the definitions are provided to the lender's attorneys, they will have to find out some other way not to answer or simply provide the answer.

Requests for admissions require the bank to admit or deny a particular statement. A position is stated by the homeowners and the bank will be able to respond with a simply "Admit" or "Deny." This helps clarify the issues which are being argued in the case and provides a list of facts that the bank and homeowners agree upon that do not have to be decided by the court. If borrowers are served with this type of discovery, it is vital to respond within the required time period (as determined by the rules of procedure), because a failure to respond is counted as admitting the truthfulness of the bank's requests.

Finally, depositions are a little bit more involved type of discovery and usually consist of questions one party asks anyone else face to face. Anyone can be the subject of a deposition, and these proceedings are done with a court reporter placing the deponent under oath. The main purpose of a deposition is to find out more about the bank's case and question any adverse witnesses that may be trotted out to injure the borrowers' positions. The issue of depositions deserves its own book and several have been written about them, to which homeowners are referred if they wish to use this type of discovery.

But as soon as the bank begins the lawsuit and the homeowners are served with the complaint, they can begin requesting that the bank provide documents and answer interrogatories. These can be done with the intention of forcing the bank to admit that it does not really have a case or its ability to sue is nonexistent or it did not follow the correct notification and pre-foreclosure procedures. Banks typically fail to follow all of the laws and rules, so the more research borrowers do into these laws and the more information they get the lender to provide, the easier it will be to stop foreclosure by shooting down the bank's court case.

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

Until the arrears due on a defaulted mortgage are paid off, either through a repayment plan, selling the home, or refinancing, the bank will never give up trying to pursue a foreclosure against the owners. No matter how many attempts to take the home fail, the lender and its attorneys will always return to court, filing motions and appeals which are meant to bankrupt the borrowers or intimidate them into giving up their defenses.

Thus, even when a Motion to Dismiss a foreclosure lawsuit is successful, the best the borrowers can hope for is a few extra months to plan for their future without the threat of being evicted. The bank will have to go back to the drawing board and begin the pre-foreclosure and notification processes again, which may take several months. But the loan will end up back in court -- there is little doubt of this happening.

Of course, this does not mean that homeowners should not file extensions for more time and motions to dismiss the case every time they have reason to do so. But eventually, the lender may actually comply with all of the laws in a manner that satisfies the judge in the case. Or else, the judge may just know who is paying the attorney fees and court filing fees in the case (the bank) and simply allow the lawsuit to proceed anyway.

Once this happens, the homeowners must file their answer to the foreclosure lawsuit. Every answer will have three major parts to it, along with a fourth optional part that homeowners may use if the case against the bank warrants it. These parts of the answer are statements admitting or denying the allegations of the bank, a list of defenses, a list of affirmative defenses, and any counter claims the borrowers are making which act as a lawsuit against the mortgage company.

In answering the complaint, then, homeowners will refer to a copy of the bank's allegations and the evidence it is relying upon to make them. If they do not have a copy of the complaint, they may obtain a copy from the clerk of court. Otherwise, it will be close to impossible to admit or deny the bank's arguments if the homeowners have no idea what those arguments are to begin with. And admitting one allegation or another does not necessarily mean the borrowers are admitting fault or that the bank has a right to take the home.

The defenses will list reasons why the homeowners believe the bank should not have filed the lawsuit in the first place. In most answers, these are presented as a list or an outline, rather than meticulously detailed. They simply put the courts and bank on notice of the defenses the borrowers will rely upon if the case goes as far as a trial. But owners do need to list every defense they will use, as they can not raise a new defense later on in the case if it was not contained in the answer or an amended answer.

Affirmative defenses are statements arguing that, while the bank may be right about one of its allegations, it should not matter for one reason or another. Thus, even though the bank may not be completely wrong in suing for foreclosure, judgment should not be awarded in its favor anyway. If the lender fails to meet notification requirements or it is the cause of the foreclosure itself (due to mortgage servicing fraud, for instance), the borrowers may be able to make the case that the bank should not be awarded a foreclosure judgment.

Counter claims act as lawsuits the homeowners file against the bank, but in the context of their answer and defense to the bank's initial lawsuit. Any counter claims the borrowers wish to raise should be included with the answer and not "saved for later." Once the lawsuit involving the mortgage contract has been decided, the borrowers will not have the opportunity to bring it back into court to make claims against the bank. They will have to be raised during the foreclosure lawsuit and listed in the answer for the courts to consider them.

Although it may seem like a lot of work, homeowners can put together a fairly robust defense against the mortgage company by researching a few laws and making sure they use the courts to their advantage. After a Motion for Extension of Time and a Motion to Dismiss have extended the foreclosure legal process by a period of months, it is time to get to the real work of defending the home against the bank's lawsuit. Filing an answer is the first step here, and will put the bank on notice that it will not have an easy time of taking the property from the borrowers without making absolutely sure it has complied with all of the required laws and regulations.

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

Once homeowners defending their home against foreclosure in court have received additional time by filing a Motion for Extension for Time, the next step is to begin researching their options for the actual defense. But if the bank has committed certain errors in attempting to establish their ability to sue at all, borrowers should hold off on filing their answer until a Motion to Dismiss is decided upon by the judge in the case.

However, there are only a handful of strong reasons for filing a Motion to Dismiss which can stop foreclosure before the the merits of case are even seriously considered. These defenses have much to do with the legal ability of the bank to sue the borrowers in the first place, or its inability to follow the necessary foreclosure laws and comply with notice requirements. But these can often be the most tricky requirements to meet, and any failure can be used against the bank to throw the lawsuit out of court.

Especially if the homeowners know that their loan has been sold around to various lenders and servicing companies, they should contest who actually owns the mortgage at the time of the foreclosure. Banks may be unable to show an assignment of the loan from one company to the next, especially if the lawsuit is being pursued by a large lender or servicer.

One clear indication of this deficiency is if the bank does not attach the note or mortgage to the complaint, either attaching a copy or admitting it does not have possession of the note. It is difficult to establish that a contract has been breached between two parties if the party suing for breach of contract can not even produce the original contract. This is the problem banks run into when they attempt to foreclose on a home but have not done the homework necessary to establish their ownership of that mortgage.

Also, if the borrowers have reason to suspect that the bank did not follow the state and county foreclosure laws dictating how notice of the foreclosure lawsuit must be given, a Motion to Dismiss for Insufficiency of Process may be filed in lieu of an answer to the complaint. Obviously, if the lender has not even fully complied with the requirements to bring a lawsuit in the first place, there is little worth defending, and the homeowners may be able to have the suit thrown out.

The bank will have to restart the foreclosure process all over again, but having the case thrown out the first time will give borrowers extra time to find alternative solutions to foreclosure. Having filed a successful Motion to Dismiss because of the bank's attorneys' mistakes in filing the suit to begin with will also drive up the costs of the foreclosure altogether and may help persuade the mortgage company to come to the negotiating table with a reasonable offer.

Possibly the best aspect of the Motion to Dismiss is that it will drag out the foreclosure for another few weeks at the most and potentially over a month or more. The courts have stated that defendants do not have to file an answer to the complaint until a Motion to Dismiss has been ruled upon. When borrowers file an extension for time, followed by a Motion to Dismiss, the bank's attempts to take the home quickly are put on hold. Although this may cost the homeowner more in the long run in interest and late fees, it also provides a much needed opportunity to look into other defenses or methods to save the home.

For the last few years, the mortgage industry has entered a state of disrepair, with hundreds of lenders going out of business, mortgage securitization firms filing bankruptcy or entering mergers or receiving federal bailouts, and even the nations two largest mortgage buyers, Fannie Mae and Freddie Mac, being nationalized. With all of this going on in addition to an alarming foreclosure crisis, banks may have a difficult time proving they can even sue families for foreclosure. But unless the owners try to have these lawsuits dismissed before they can be ruled upon, banks will continue to be able to steal homes.

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

Homeowners researching their options for stopping foreclosure in the court system can get bogged down in dozens of different defenses. From the note not being attached to the complaint, to constructive fraud, to to violations of state and federal racketeer influences and corrupt organizations acts (RICO), borrowers may feel overwhelmed at all of the various positions to raise in their defense.

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

Once the homeowners have gone through the rules that they and the bank's attorneys will need to follow in court and have requested additional time through a Motion for Extension of Time, it is appropriate to begin researching various legal defense options. While many of these defenses against foreclosure may be used in the answer to the complaint, a few of them should be looked into first to determine if filing a Motion to Dismiss is appropriate.

This part of the process can be labor intensive and quite time consuming, so borrowers must be willing to put in the hours of research into how various federal laws work, what would indicate a violation, and what the violation means to the bank's lawsuit. The use of one defense or another will, of course, depend on the homeowners' goals with the house, whether they want to keep it, force the bank to negotiate a mortgage modification or other solution, or simply get as much time as possible to sell or move out.

If they are trying to have a mortgage rescinded entirely, borrowers may not want to raise defenses with a maximum penalty to the bank of a few thousand dollars, for instance. Finding a stricter law with heavier penalties would make more sense. But for homeowners just trying to get some extra time to save up money to move out, the more that can be argued against the bank, the more time the lawsuit will take.

In any case, homeowners trying to stop foreclosure by defending the lawsuit should pay special attention to the defenses that would allow them to have the entire mortgage rescinded or the lawsuit thrown out of court. Certain violations of the Truth in Lending Act (TILA) and the Home Ownership and Equity Protection Act (HOEPA) would result in severe penalties for the bank. As well, the messiness of mortgage assignments may cast doubt on the mortgage company's ability to sue in the first place, if it can not prove it owns the original note.

Also, homeowners should have as one of their goals filing a Motion to Dismiss the case based on the bank's lack of legal standing or failure to follow the notification and pre-foreclosure procedures before initiating the lawsuit. Both the Federal Housing Administration (FHA) and state foreclosure laws dictate what a bank must do before it declares a house to be in foreclosure and attempts to have the homeowners removed by court order. If the lender does not follow these procedures, the lawsuit may be thrown out for the present time until the bank complies with the requirements. And these defenses can be raised before an answer to the complaint is even filed, if a Motion to Dismiss is filed instead.

Filing a Motion for Extension of Time may be almost automatic for homeowners facing foreclosure. The benefits of this apply to nearly all borrowers, including those who want extra time to mount a defense, work with the lender on a solution to foreclosure, or just want an extra few weeks to get their finances in order before moving out. But for those owners who are serious about defending their home in court, the next step after getting more time is simply researching what laws and regulations apply to their case and beginning to mount their defense.

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

Time is the most critical factor in any foreclosure proceeding. Homeowners never seem to have enough of it, and every solution to the problem takes too much of it. And all the while, the bank is accelerating fees and charges as time goes on, while its attorneys file one motion after another with the court to push the foreclosure through as quickly as possible. This is why borrowers who are defending against the lender need to obtain as much additional time as they can.

Obviously, there are numerous ways to do this, from requesting that the bank simply put the process on hold to filing bankruptcy to stop foreclosure. These methods can be quite effective, and most homeowners overlook simply asking the bank to give them an additional month to sell, refinance, or find another solution to foreclosure. And although most borrowers consider bankruptcy a last resort to save the home, it will put the foreclosure on hold indefinitely until the courts have sorted out the bankruptcy case.

But homeowners can also use their local court to gain additional time to save the house or put together a more suitable defense to the foreclosure lawsuit. By filing a Motion for Extension of Time, borrowers can typically receive at least an additional thirty days to file an answer with the court. Most of the time, lawsuit defendants are given 15-20 days to respond to an initial complaint, which may not be nearly enough time to research the applicable issues and put them into a coherently organized defense.

Borrowers who are facing foreclosure are also notoriously stressed out and uncertain of just how to proceed with their lives. Losing a job or facing a medical emergency can create a crisis moment in the life of a family, and having roughly two weeks to put together a defense to a lawsuit may be impossible.

Thankfully, courts are mostly favorable to a Motion for Extension of Time, and banks rarely even oppose them by filing an objection, especially if the request is for a reasonable amount of time. Of course, if the homeowners ask for an additional year in which to file their answer without repercussions of foreclosure, the courts will view this as nothing more than a blatant attempt to take advantage of the legal system and keep the foreclosure on hold forever.

But reasonable requests for additional time will most often be granted. Once the extra time has expired, however, the homeowners better have filed their answer, if they hope to utilize the government courts to stop foreclosure for good. If the answer if filed after this date, it will probably be thrown out and a default judgment awarded in favor of the lender. Thus, if a Motion for Extension of Time is filed, borrowers must use that time to put together their thoughts and answer the complaint.

Of course, if there is reason to file a Motion to Dismiss instead of an answer, this should be done. As discussed previously, an answer to the complaint does not have to filed until the hearing for the Motion to Dismiss has been held. If homeowners use their additional time from the Motion for Extension of Time to attack the bank's ability to bring the lawsuit at all, they can file a Motion to Dismiss, and avoid filing their answer to the complaint. This will drag out the foreclosure process even longer and make the bank defend its standing to sue in the first place.

The longer a foreclosure lawsuit takes, the more the bank may be willing to come to the negotiating table and offer the borrowers are beneficial solution. Few homeowners utilize the courts effectively and even attend the initial hearing for fear of being thrown into a mythical debtors prison or publicly humiliated, let alone defend the bank's efforts to take their property. But a few simple motions, filed in accordance with the applicable rules of procedure, will put lenders on notice that homeowners will not go down without a fight.

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

Earlier we looked at some tips to help ease the stresses and worries for future home buyers. Some of the previous advice given: information on not getting over your head with a large mortgage. How real estate agents can affect home buying. Do online research and get to know your future neighborhood better. These are important bits of information please review Part I.

Today we are going to continue on with some advice when looking for a home in today’s unstable market. The first few tips are for someone who has established credit, while the final suggestions will be for someone whose credit may not be as strong.

Negotiate with the home seller for the property you are interested in. You never know what the seller’s situation might be and it will not hurt asking for a lower price. Be ready to walk away from the house though, if they will not meet your request. If you do not want to lose the house, you may want to be careful how demanding your requests are. If the seller is under a lot of pressure to sell, they might be open to your demands.

Foreclosed properties can be good or bad. Upfront they may seem like a great deal, being less expensive than similar houses not in foreclosure. However, if the homeowner has been unable to make their mortgage payments, it is not very likely that they have kept up with general maintenance of the home itself. You could end up getting stuck with a property that has larger issues than you are willing to deal with.

Getting a good mortgage and knowing which lender is right for you can be one of the biggest challenges of home ownership. There are many unethical lenders out there offering great deals, but remember, if it sounds too good to be true, it probably is. If you are caught with an unsavory lender and something bad happens in the future, the status of your home and ability to secure a second mortgage could come into question. You do not want to loose everything due to a bad mortgage company.

Get a home inspection. You need a third party, unbiased view of the property, before you buy. You want to know all of your property’s potential problems up front, so pay for an excellent home inspector. Do research before hand and ask friends if they know a quality inspector. If they find a problem that seems more of a headache than what it’s worth, you have the opportunity to back out before purchasing (assuming your offer was contingent on a property inspection).

If you have bad credit, consider buying a house through a lease purchase or rent to own. It is a great time to purchase a house at a fixed price. Renting the house until you can afford to get your mortgage will give you time to raise your credit score, which will lower your monthly payments by getting a better interest rate.

Finally, just keep in mind your long term plans before buying a home. A home purchase is a huge investment, so look for a home that will suit you now, as well as several years down the road. You can invest in your home and make any necessary upgrades to help you grow with the property and these improvements will help to increase your investment and make you more financially secure in the future.

When dealing with a foreclosure defense, homeowners' largest stumbling block will most likely come from the technical aspects of how the court system works. Various sets of rules are in play in every court in the country, and these rules will have state and local variations that must be taken into account by both parties to the lawsuit and all of the attorneys involved. But the complexity of each of the layers of state and local rules may give homeowners a tremendous advantage in locating areas where the bank violates procedure.

Courts have two different types of rules, one to govern criminal procedures and one for civil. These "Rules of Civil Procedure" will apply to foreclosure cases, as they are disputes between individuals (or corporations) and not violations of state or federal criminal laws. So homeowners should print out their state's rules of procedure, as well as any other rules that may be administered by the local court system. These can usually be printed from the State Supreme Court website, and copies of local rules can be obtained from the individual court.

Many states have now either adopted the Federal Rules of Civil Procedure, or have followed the general layout and numbering system in writing their own rules. If homeowners need to search a specific rule, they may be able to do so through the federal version online and have a general idea of where the similar rule can be found in the state version. But it is also important not to rely only on the federal rules, as changes in wording or numbering may be made by the states.

Homeowners who cite a particular rule in their defense will want to refer to the applicable state rule, rather than the corresponding federal one. This is another reason why it is important to refer to federal rules, since they may be easier to research online and gather definitions and background information about, but always make sure the numbering system follows the state's version, as that will be the set of rules that are followed in the courts where foreclosure cases are generally heard.

Actual violations of various rules will be examined in a future article, but for now, homeowners who are interested in the process of making a defense to a foreclosure lawsuit simply need to have the state and local rules in front of them. This serves a number of purposes that will keep the homeowners' case from being thrown out of court prematurely and possibly put the bank on the defensive.

First, the owners will be able to follow the rules themselves and make sure that the bank can not have the borrowers' case thrown out on some technicality. Second, homeowners can examine the rules looking for violations that the attorneys or bank have committed and attempt to have the bank's lawsuit thrown out. And finally, simply having an awareness of some of the applicable rules will give homeowners more confidence when they must appear at a hearing or state a defense to the bank's allegations.

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

With today’s unstable market, the home buying process has become pretty nerve wracking for future buyers. With the increased foreclosures and tightened restrictions on mortgages, it can be a very difficult time to buy a new home. Lenders are getting more picky about who they will qualify, making it much harder for families in the housing market.

On the good side, if you have a strong credit rating and already qualify for a mortgage, it can be a great time to purchase a home. With lower home prices and a pre-approved mortgage, the market can present more of an opportunity to established homeowners than for a first time buyer. There are some tips, however, to help you stay within a safe area for your future home purchase despite the unstable market.

Do not get in over your head with a large mortgage. Everything looks great on paper until you get the first bill and they keep on coming for the next 30 years. You need to figure out how much you can actually afford each month and for how long. There are some important questions you should ask yourself before buying. Can you afford this monthly home expense while saving for retirement, college, kids, or even a new car? What are the other bills (utilities, taxes) that will come along with this new house? Knowing answers to these questions will help you decide on what you need your monthly mortgage expense to be.

Real estate agents can affect home buying. You need to keep in mind that all real estate agents are not the same. Ask questions to a real estate agent that you are thinking of working with. This way you will find one that is best suited for your needs and personality. Some questions to ask; Do they have experience with title searches or can they help you spot potential problems with the property? Having a good real estate agent is priceless and will save you a lot of headache.

Doing online research about the area you are potentially looking to buy in, is very important. Find out crime statistics, school districts, home prices and comparable sales. You can find all kinds of information buy joining online forums and asking for advice from people who live in the same area. A good site to look at is www.city-data.com, you will find an array of useful real estate information.

Explore and get to know the area personally. If your looking to buy a home, than you will most likely be planning on spending a good amount of time there, so walk around your future neighborhood and try to meet a few of your neighbors. Another good idea is to attend local open houses or contact for sale by owner homes. By doing this you can find out what others think of the neighborhood and why they are moving. Drive through the streets as well, try to notice the area; are there a lot of kids, working parents, or older couples? Answers to all these questions will give you a better idea of what your future neighborhood will be like.

These are just the top tips for buying a home, look for more help in an upcoming article. There is no reason to be scared of the unstable market, just make sure to do your research. Keep your future in mind and know that it is your happiness that matters most.