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WHAT TO EXPECT AFTER FILING A COMPLAINT FOR MORTGAGE FORECLOSURE
THERE ARE MANY COMMON AFFIRMATIVE DEFENSES USED BY BORROWERS WHEN A MORTGAGE FORECLOSURE ACTION IS FILED AGAINST THEM. MOST DEFENSES ARE RELATED TO THE VALIDITY OF THE NOTE/MORTGAGE AND THE RIGHT TO ENFORCE THE TERMS AND CONDITIONS OF THE AFOREMENTIONED LOAN DOCUMENTS. IN PREPARATION FOR HANDLING A CONTESTED FORECLOSURE ACTION, IT IS HELPFUL TO BE AWARE OF SOME OF THE MOST COMMON DEFENSES USED BY DEFENDANTS. ALTHOUGH DEFENSES TYPICALLY VARY BASED ON THE LOCATION OF THE FORECLOSURE ACTION, THE FOLLOWING THREE DEFENSES ARE CONSIDERED UNIVERSAL.
ALLEGED FAILURE TO SEND NOTICES
OFTEN TIMES THE MORTGAGE ITSELF WILL CONTAIN A PROVISION THAT REQUIRES LENDERS TO NOTIFY THE BORROWERS OF DELINQUENCY IN PAYMENTS OR DEFAULT BASED ON A VIOLATION OF THE TERMS AND CONDITIONS OF THE MORTGAGE. IN ADDITION, EACH STATE GENERALLY HAS A STATUTE REQUIRING MORTGAGORS TO SEND A NOTICE OF INTENT/ACCELERATION LETTER TO THE BORROWERS PRIOR TO INITIATING A MORTGAGE FORECLOSURE ACTION. LENDERS ARE REQUIRED TO SEND THESE NOTICES TO ALL BORROWERS WITHIN A CERTAIN TIME PERIOD BEFORE THEY ARE PERMITTED TO FILE A COMPLAINT FOR MORTGAGE FORECLOSURE.
WITHIN EACH NOTICE OF INTENT/ACCELERATION, THE BORROWERS SHOULD BE ADVISED OF THE AMOUNT OF PAST DUE PAYMENTS AS WELL AS A CURE BY DATE. IN ADDITION, THE NOTICE OF INTENT/ACCELERATION SHOULD PLAINLY STATE THAT FAILURE TO CURE SUCH DEFAULT MAY RESULT IN IN ACCELERATION OF THE BALANCE OF THE NOTE AND FORECLOSURE OF THE MORTGAGE. A COMMON MORTGAGE PROVISION WILL PROVIDE FOR THIRTY (30) DAYS FROM THE DATE OF THE NOTICE OF INTENT/ACCELERATION BY WHICH THE BORROWERS ARE REQURIED TO CURE THE DEFAULT IN ORDER TO AVOID THE FILING OF A FORECLOSURE ACTION.
ALLEGED STATUTE OF LIMITATIONS VIOLATIONS
THE STATUTE OF LIMITATIONS SETS THE TIMEFRAME WITHIN WHICH A LEGAL CLAIM CAN BE INITIATED. WHEN A CASE IS FILED AFTER THE APPLICABLE STATUTE OF LIMITATIONS PERIOD HAS RUN, IT IS COMMON FOR BORROWERS TO SEEK DISMISSAL BASED ON THE ALLEGED FAILURE TO SEEK RELIEF DURING THE REQUISITE WINDOW. THESE STATUTES BEGIN TO RUN, GENERALLY, WHEN THE DEFAULT OCCURS. FOR EXAMPLE, IF THE BORROWERS FAIL TO MAKE THE MONTHLY INSTALLMENT PAYMENT WHICH IS DUE AND OWING FOR JUNE OF 2018, THE LENDER WILL HAVE FROM THAT DATE UP TO THE APPLICABLE STATUTE OF LIMITATIONS CUT-OFF TO FILE THE FORECLOSURE ACTION. IF THE STATUTE OF LIMITATIONS PERIOD IS TOLLED DURING A PENDING FORECLOSURE ACTION, IT IS NO LONGER CONSIDERED A VALID AFFIRMATIVE DEFENSE BECAUSE AS LONG AS THE ACTION WAS INITIATED PRIOR TO THE RUN DATE, THE BORROWERS CANNOT RELY ON THAT ARGUMENT TO AVOID THEIR OBLIGATIONS UNDER THE LOAN DOCUMENTS.
EACH STATE HAS A SPECIFIC STATUTE OF LIMITATIONS FOR FORECLOSURE ACTIONS. IN SOME STATES, THE APPLICABLE FORECLOSURE STATUTE OF LIMITATIONS IS CONSISTENT WITH THE STATUTE OF LIMITATIONS FOR WRITTEN CONTRACTS. MOST OF THESE STATUTES OF LIMITATIONS WILL RANGE FROM THREE (3) TO SIX (6) YEARS, WITH SOME EXTENDING UP TO FIFTEEN (15) YEARS.
ALLEGED VIOLATIONS OF THE TRUTH IN LENDING ACT, 15 U.S.C. §1601 ET SEQ. (“TILA”)
THE TRUTH IN LENDING ACT PROVIDES PROTECTION TO CONSUMERS DURING CREDIT TRANSACTIONS BY REQUIRING LENDERS TO PROVIDE BORROWERS FULL DISCLOSURE OF THE TERMS AND CONDITIONS OF THE LOANS THEY MAKE. THIS PROTECTION EXTENDS TO RESIDENTIAL MORTGAGES. THE LENDER’S FAILURE TO COMPLY WITH THE PROVISIONS OF TILA GIVES THE BORROWERS THE RIGHT TO RESCIND, OR CANCEL, THE LOAN.
IN ORDER TO COMPLY WITH THE TRUTH IN LENDING ACT, LENDERS MUST FULLY DISCLOSE TO THE BORROWERS THE SPECIFIC CONDITIONS OF THE LOAN, SUCH AS: COMPLETE INFORMATION ABOUT THE COST OF A LOAN, FINANCIAL CHANGES, INTEREST PAID BEFORE OR DURING THE LOAN, INSURANCE FEES, AND LOAN ORIGINATION FEES.
PLEASE NOTE, THE MATERIAL INCLUDED ABOVE IS FOR INFORMATIONAL PURPOSES ONLY, IS GENERAL IN NATURE, AND IS NOT INTENDED TO AND SHOULD NOT BE RELIED UPON OR CONSTRUED AS A LEGAL OPINION OR LEGAL ADVICE REGARDING ANY SPECIFIC ISSUE OR FACTUAL CIRCUMSTANCE. ADDITIONALLY, THE POSTING OF THIS MATERIAL DOES NOT CREATE AN ATTORNEY-CLIENT RELATIONSHIP BETWEEN YOU AND THE LAW OFFICES OF DAMIAN G. WALDMAN, P.A., OR ANY OF ITS AFFILIATED FIRMS.