Better Informed Housing

Summary

In this informative discussion, Fanciful Teeb and Attorney Stephanie Arcenti from the Better-Informed Housing Corporation delve into foreclosure defense, exploring legal protections available to homeowners. They discuss the importance of understanding foreclosure notices, proper service of court documents, and defenses like counterclaims under federal regulations. They also highlight challenges posed by changes in laws, such as dual tracking by lenders and the erosion of certain defenses. Through practical advice, they aim to empower borrowers facing foreclosure, emphasizing the importance of expert legal representation and active defense strategies.

Takeaways

• 😀 Foreclosure defense attorneys can help borrowers navigate legal challenges when facing foreclosure, including various strategies to delay or stop the process.
• 😀 One key defense is ensuring that the lender has followed proper notice requirements, including the grace period notice, which was once required but has since been sunset in Illinois since mid-2016.
• 😀 Under federal law (RESPA), lenders must provide a written notice 120 days after a default, outlining the amount owed and mitigation options before initiating a foreclosure action.
• 😀 A major defense tactic is challenging the proper service of legal documents. If service is not properly done (i.e., failing to deliver foreclosure complaint documents correctly), borrowers can file a motion to quash.
• 😀 Homeowners can file a motion to dismiss a foreclosure lawsuit if the lender violated conditions required by the mortgage agreement or federal law.
• 😀 The concept of 'standing' in foreclosure actions has become more complicated due to recent legal rulings, making it harder for borrowers to challenge who has the right to foreclose on their property.
• 😀 Foreclosure cases can involve technical defenses related to the lender’s failure to prove they legally own the loan, such as improper assignment of the mortgage or note.
• 😀 'Dual tracking' is a major issue, where lenders continue foreclosure proceedings while considering loan modifications. This practice is prohibited under RESPA and can be used as a defense for borrowers.
• 😀 Counterclaims related to loan modifications are a valuable defense. If a borrower’s loan modification application is mishandled or delayed, they can use this as leverage in a foreclosure case.
• 😀 Although many defenses have been weakened over time, such as arguments based on chain of title, there are still viable strategies, like counterclaims or challenging dual tracking, to delay or stop foreclosure actions.

Q & A

What is the main topic discussed in the video?

The main topic discussed is foreclosure defense from the borrower's side, focusing on strategies and legal defenses available for homeowners facing foreclosure.

What was the impact of the Illinois law change in mid-2016 on foreclosure defense?

The Illinois law change in mid-2016 sunsetted the requirement for lenders to send a grace period notice, which was previously a key defense in foreclosure cases.

What is the 'grace period notice' that was required before 2016?

The grace period notice was a requirement that lenders had to send to borrowers in default before proceeding with foreclosure. This gave borrowers additional time to address the issue before the lender could accelerate the foreclosure process.

What is the current federal rule regarding foreclosure and default under RESPA?

Under the Real Estate Settlement Procedures Act (RESPA), lenders are required to wait 120 days after a borrower defaults on a loan before filing a foreclosure complaint.

Can a borrower challenge a foreclosure if the 120-day notice requirement isn't met?

Yes, a borrower may bring a counterclaim based on the violation of RESPA's notice requirements, although it may not necessarily prevent the foreclosure from proceeding unless it’s part of a broader legal strategy.

What is the process for challenging improper service of foreclosure documents?

If a borrower has not been properly served with foreclosure documents, they can file a motion to quash, which challenges the validity of the service and can potentially stop the foreclosure process.

What constitutes improper service in foreclosure cases?

Improper service occurs when the foreclosure documents are not physically handed to the borrower or someone at their residence who is over 13, or in some cases, a family member who may not even reside in the household.

What is a motion to quash, and how does it relate to foreclosure cases?

A motion to quash is a legal request to invalidate the service of foreclosure documents. If the borrower can prove they were not properly served, the court may dismiss the case or delay the proceedings.

What is dual tracking, and why is it problematic in foreclosure cases?

Dual tracking refers to the practice where a lender continues the foreclosure process while simultaneously considering a loan modification request from the borrower. This is problematic because it can result in foreclosure even before the borrower’s loan modification request is addressed.

How do counterclaims based on loan modifications help in foreclosure defense?

Counterclaims based on loan modifications are used to challenge foreclosure proceedings if the lender is engaging in dual tracking or not responding to the borrower’s loan modification request in a timely manner, potentially halting the foreclosure process.

What is the role of standing in foreclosure cases, and how has it evolved?

Standing refers to the ability of a party to prove they have the right to foreclose. In the past, borrowers could challenge foreclosure based on the bank’s failure to prove standing, especially when the mortgage was securitized and transferred multiple times. However, recent rulings, such as the Bassman case, have weakened this defense, making it more difficult to argue standing.