In most foreclosure cases, homeowners simply believe that they either have the right to pay back what they owe on the mortgage, work out an arrangement with the bank to get back on track, or move out of the house before eviction. Unfortunately, too many choose to try and work with the bank in a desperate effort to save the home. What happens too often is that homeowners ignore the legal process in the courts, give up their rights to defend the foreclosure, and are turned down by the bank at the last minute.
Thus, homeowners spend more time trying to obey the commands of the bank and work out any deal that will allow them to stay in the home, rather than actually standing up for their rights to the house. Borrowers, even if they miss payments on a loan, have more rights to defend their home and demand that the bank follow strict procedures and laws before it can take a home through foreclosure. But these rights must usually be defended in court before the sheriff sale of the property is scheduled and ownership of the property is transferred back to the bank or a new owner.
But every family facing foreclosure has a number of rights it should be aware of, and stand up for every one of them. If they do not, the banks will have a much easier time suing for foreclosure, taking the home to a public auction, and then evicting the borrowers. And this whole process, if homeowners do not defend their rights, can take just a few months. But simply by standing up for their rights in a foreclosure, homeowners may be able to drag out the process by many additional months or even years. And they will be able to leave the home on their own terms, if it comes to that.
While all borrowers have their constitutional rights guaranteed to them during a foreclosure, how these rights work may differ slightly in judicial and nonjudicial foreclosure states. Banks must also follow all of the applicable laws that govern mortgage lending, and violations of these laws may be violations of homeowners’ rights.
In states that use mortgages that do not contain a “Power of Sale” clause, judicial foreclosure will most often be used. In this case, the lender must initiate a lawsuit in court to foreclose on the house. Homeowners usually must be served with the lawsuit paperwork and will have the right to file a response and defend against the bank’s complaint. All of the rights of the legal process are guaranteed to the homeowners, and they may raise whichever legal defenses to foreclosure that they feel are appropriate.
In fact, there are a number of legal defenses that homeowners may raise that attack the banks right to foreclose in the first place.
If the bank does not own the original mortgage note, it may not be able to prove it has the legal standing to take the house. And if homeowners were never served with the lawsuit paperwork in states that require it, they may be able to argue that their rights were not protected.
Some states use a different loan document called a deed of trust. These documents often contain a “Power of Sale” clause that allows the lender to sell the property without having to begin a lawsuit. These are the nonjudicial foreclosure states. But even in these states, laws have been put in place to protect homeowners’ rights to their property.
The most significant rights in nonjudicial states have to do with notice requirements for homeowners. State foreclosure laws will determine what notices must be sent to borrowers, how much time they have to respond to the notice by paying off the loan or reinstating the payments, and when the sheriff sale will be held. If homeowners do not receive these notices, they may be able to bring their own lawsuit into court to argue that the foreclosure should not be allowed because the notice requirements were not complied with.