Challenging the foreclosure process

September 24th, 2008 by Reed Allmand

You can successfully challenge the foreclosure by:

• Suing to Enjoin Foreclosure before It Occurs
• Suing to Set Aside a Foreclosure that Has Already Taken Place
• Filing for Bankruptcy

In certain states, you can obtain an injunction by filing a complaint in a court. You will need an attorney to do this. The process is made more arduous by a requirement that you give five days’ notice to the lender before seeking to enjoin the foreclosure.

You can file a compliant in a court and obtain an injunction. Based on your state laws, you may be required to give notice to the lender before seeking to enjoin the foreclosure.

You must show an immediate and irreparable injury, loss or damage or that the acts or omissions of your lender will tend to render the final judgment ineffectual. You may be required to give a bond in such sum as the court deems proper.

You can sue and set aside a foreclosure that has already taken place. But you must provide evidence of irregularity, misconduct, fraud, or unfairness on the part of the trustee or the lender that caused or contributed to an inadequate price. The burden of proof is on you. Damages are the only remedy. You cannot prevent a third-party purchaser from keeping your house even if he is aware of your claim against the lender and even if he believes your claim to be valid. Defenses like the absence of a delinquency or violations by the lender of federal or state commercial law may not be raised.

Foreclosure can also be challenged by a counterclaim when the lender or other new owner of the property seeks possession by a “detainer” action.

Not every new owner is successful in obtaining possession. It may overlook the proof that is necessary to show that it the foreclosure was conducted properly and that it was entitled to foreclose. You may and should contest every assertion made by the new owner, even if you do not have a lawyer. The new owner has the burden of proof. If it fails to meet that burden, the court may conclude that you are entitled to remain in possession even though you no longer own the home.

Filing Bankruptcy before foreclosure occurs is the generally the shortest and simplest procedure. A bankruptcy filing automatically prevents foreclosure temporarily and sometimes permanently. You get the opportunity to cure a default in your payments by paying the delinquent amount in installments over a reasonable period. You must file before the foreclosure sale takes place, a time that usually is only 20 or so days after the foreclosure process starts with a letter to you or a notice in a newspaper.

You can file for bankruptcy after foreclosure and set aside the foreclosure. Even you do you not succeed in setting aside foreclosure, bankruptcy will discharge all or part of a deficiency judgment against you for any amount still due after the foreclosure occurs.