Better Informed Housing

Summary

In this live broadcast, attorney Stephanie Arcenti discusses foreclosure defense strategies, focusing on the Real Estate Settlement Procedures Act (RESPA) and key regulations that protect borrowers. She explains how violations of RESPA can be used as counterclaims in foreclosure cases, including issues like improper mortgage servicing transfers and failure to resolve errors. Arcenti also highlights the importance of loss mitigation procedures and the Fair Debt Collection Practices Act in defending against foreclosure. Viewers are encouraged to contact Better Informed Housing for assistance with foreclosure defense and housing-related issues.

Takeaways

• 😀 **Homeowners facing foreclosure can challenge the process** using various legal defenses such as counterclaims based on consumer protection statutes.
• 😀 **RESPA (Real Estate Settlement Procedures Act)** violations can lead to powerful defenses in foreclosure cases, including the potential for statutory and actual damages.
• 😀 **Loss mitigation applications** (e.g., loan modifications, short sales, deeds in lieu of foreclosure) cannot be ignored by servicers while foreclosure is pending.
• 😀 **Dual tracking** (continuing foreclosure while considering loss mitigation) is prohibited, ensuring servicers only move forward with foreclosure after evaluating the homeowner's request.
• 😀 **Mortgage servicing transfer violations** can also be used as a defense, especially if the servicer fails to notify the borrower in a timely manner.
• 😀 Homeowners must be proactive in submitting **loss mitigation applications** before the foreclosure sale is scheduled, which must be submitted at least **37-38 days prior to foreclosure**.
• 😀 The **Fair Debt Collection Practices Act (FDCPA)** protects homeowners from harassment or unfair practices by third-party debt collectors, including in foreclosure cases.
• 😀 Homeowners can file **counterclaims** under FDCPA if they believe they are being harassed or wrongfully pursued for foreclosure by debt collectors.
• 😀 If **consumer rights violations** are found during the foreclosure process, homeowners may be entitled to **actual damages**, **statutory damages**, and even **injunctive relief**.
• 😀 Various consumer protection statutes, such as the **Telecommunications Practices Act** and the **Fair Credit Reporting Act**, provide additional legal tools to help homeowners defend against foreclosure.

Q & A

What is the primary role of RESPA in foreclosure defense?

RESPA (Real Estate Settlement Procedures Act) governs the handling of mortgage transactions, ensuring that homeowners receive proper notifications, disclosures, and responses to requests for information. It helps protect consumers by providing mechanisms to challenge errors in mortgage servicing, which can be used in foreclosure defense.

What happens if a homeowner submits a loss mitigation application during a foreclosure process?

If a homeowner submits a complete and pending loss mitigation application, such as for loan modifications or short sales, the lender or servicer cannot proceed with foreclosure. The foreclosure sale or judgment against the homeowner cannot take place until the application is either approved or denied.

What is the time frame for submitting a loss mitigation application before foreclosure proceedings?

The homeowner must submit a loss mitigation application at least 37 days before the foreclosure process can proceed, ensuring that the servicer has enough time to evaluate the application.

Can the lender or servicer proceed with foreclosure if a loss mitigation application is incomplete?

No, the servicer cannot proceed with foreclosure if the loss mitigation application is incomplete. The application must be facially complete, and it must be evaluated before any foreclosure actions can be taken.

What types of loss mitigation applications can a homeowner submit?

Homeowners can submit various types of loss mitigation applications, including requests for loan modifications, short sales, or deeds in lieu of foreclosure. Each option aims to help the homeowner avoid foreclosure and resolve their mortgage issues.

How can violations of the Fair Debt Collection Practices Act (FDCPA) affect foreclosure cases?

Violations of the FDCPA, which regulates the conduct of debt collectors, can lead to counterclaims in foreclosure cases. Homeowners can use these violations to challenge the foreclosure process and seek remedies such as damages or the cessation of collection efforts.

What remedies can be pursued under RESPA violations in foreclosure defense?

Under RESPA, if there are violations such as failure to respond to requests or improper handling of mortgage servicing, the homeowner may be entitled to actual damages, statutory damages (up to $2,000 per violation), and attorney's fees. These remedies can be used to challenge the foreclosure and delay or prevent it.

What does it mean for a loss mitigation application to be 'facially complete'?

A loss mitigation application is considered 'facially complete' when it includes all required documentation and information necessary for the servicer to evaluate it. This could include financial statements, proof of income, and details about the homeowner's mortgage situation.

What is the importance of the 37-day requirement in foreclosure defense?

The 37-day requirement ensures that a homeowner has enough time to submit a loss mitigation application before foreclosure actions can begin. If an application is submitted within this time frame, the servicer is prohibited from initiating foreclosure proceedings until the application is processed.

How can a homeowner utilize consumer protection statutes in foreclosure defense?

Homeowners can utilize various consumer protection statutes like RESPA, FDCPA, and the Fair Credit Reporting Act to challenge unlawful foreclosure actions. Violations of these laws can lead to counterclaims, potentially stopping foreclosure or securing damages, which help in defending the homeowner’s rights.