When facing foreclosure, many homeowners assume they have no options. But lenders frequently make errors, cut corners, and violate laws during the foreclosure process. Foreclosure defenses challenge the lender's right to take your home. A valid defense can delay, defeat, or provide leverage for foreclosure alternatives.
Lack of Standing
Standing means the party foreclosing actually has the legal right to do so—they must own your loan. During the mortgage crisis, loans were sold, bundled into securities, and transferred repeatedly. The foreclosing party must prove an unbroken chain of ownership from origination to present.
Common standing problems include missing assignments in the chain of title, improperly executed transfers, "robo-signed" documents where employees signed thousands of transfers without verification, and transfers that occurred after the foreclosure began.
Demand proof that the foreclosing party actually owns your mortgage. Request the original promissory note and all assignment documents. Gaps or irregularities may defeat the foreclosure.
Failure to Follow Proper Procedures
Foreclosure requires strict compliance with state procedures. Procedural defenses argue the lender didn't follow required steps. Missing a single required step can invalidate the foreclosure.
Required procedures vary by state but often include proper notice of default with specific content and timing, opportunity to cure the default before acceleration, proper publication of foreclosure sale notices, correct recording of documents, and following mediation or loss mitigation requirements.
Statute of Limitations
Lenders have a limited time to foreclose after default. If the statute of limitations has passed, foreclosure may be barred entirely. Limitations periods vary by state, typically ranging from 4-6 years for mortgage enforcement.
Questions arise about when the limitations period begins—at the first missed payment, when the loan is accelerated, or at another point. Strategic defaults and abandoned foreclosures can create limitations issues.
Servicer Errors and Misconduct
Mortgage servicing errors frequently occur and can form foreclosure defenses. Common problems include misapplied payments, improper fees, failure to credit payments correctly, and incorrect accounting. If the servicer says you owe more than you actually do, their numbers should be challenged.
Dual tracking—pursuing foreclosure while a loan modification application is pending—violates federal law in many circumstances. If your servicer continued foreclosure while you were under review for modification, you may have a defense and a separate claim for damages.
Violation of Consumer Protection Laws
Various federal and state laws protect homeowners. The Real Estate Settlement Procedures Act (RESPA) requires servicers to respond to qualified written requests and limits certain foreclosure activities. The Truth in Lending Act (TILA) requires accurate disclosure of loan terms.
Violations of these laws may provide defenses or entitle you to damages that can be used to offset the amount owed. Some violations carry statutory damages, attorney's fees, or the right to rescind the loan entirely.
Unfair Lending Practices
If your original loan involved predatory practices—such as fraud, misrepresentation, steering to unsuitable products, or undisclosed terms—you may have defenses and affirmative claims. Loans made through deception may be unenforceable or subject to rescission.
Common predatory lending claims include falsified income on loan applications, failure to disclose balloon payments or adjustable rates, steering qualified borrowers to subprime loans, and excessive fees that violated state usury or lending laws.
Military Servicemember Protections
The Servicemembers Civil Relief Act (SCRA) provides substantial foreclosure protections for active-duty military. Foreclosure of property owned before military service requires court approval. Interest rates on pre-service mortgages may be capped at 6%.
Using Defenses Strategically
Foreclosure defenses serve multiple purposes. Even defenses that won't ultimately win can buy time to pursue loan modification, short sale, or other alternatives. They can also create leverage for negotiation—lenders may offer better terms rather than litigate.
Document everything, respond to all notices on time, and preserve evidence of servicer communications and errors.
Getting Legal Help
Foreclosure defense requires detailed review of your loan documents, servicer communications, and the foreclosure filings. An experienced foreclosure defense attorney can identify viable defenses, challenge procedural errors, and negotiate with lenders from a position of knowledge about their vulnerabilities.