Are Foreclosure Defenses Stopping Mortgage Foreclosures?

Posted By on March 1, 2010

The sad reality of today’s housing market is that a vast majority of homeowners are unaware that lawyers around the country are raising defenses that are effectively stopping mortgage foreclosures in their tracks.  Banks are hoping that this message doesn’t reach the masses because they know this could bring the financial system to its knees.

Up to 95% of mortgages created within the past ten years were securitized (meaning they were bundled and sold to investors through a series of transactions) and are therefore subject to various contractual obligations in addition to State and Federal laws and regulations.

One such obligation relates to the mortgage loan originator’s requirement to satisfy several procedural assignments in order for these mortgages to be properly transferred to the eventual owners of these instruments.  Because in most cases these procedures were not adhered to, the mortgage foreclosure Plaintiffs are unable to legally prove ownership of the Mortgage, thereby giving rise to a defense that the Plaintiff in the foreclosure case lacks the authority to enforce the mortgage.

The question that flows from this information is: What does competent representation and this defense do for the homeowner facing foreclosure?  One answer is that this defense is allowing homeowners facing foreclosure to, at the very least, continue residing in their home without paying their mortgage during the time that the Courts determine if these mortgages are enforceable by the party bringing the foreclosure lawsuit.  Throughout the country, attorneys are raising these defenses and in many instances, the result is that the lawsuit sits dormant for years or the cases are dismissed.  The best case scenario for homeowners is that their attorney is able to pursue a legal proceeding called a Quiet Title Action, the result of which eliminates the Mortgage altogether.  However, there is a downside to these defenses.  If this scenario were to occur with regularity (which it may), our economy could collapse because of the losses incurred by investors, including banks, pension funds and retirement plans.  This is an unfortunate outcome, but one not caused by the homeowner.

If you are facing the possibility of foreclosure, whether for residential or commercial property, or if you’ve defaulted on your mortgage payment, contact Sackrin and Tolchinsky, P.A., experienced real estate foreclosure attorneys, to guide you through the foreclosure defense process and explain to you your legal rights. Our office offers these services to our clients on a compensation arrangement designed to fit within most budgets.

If you would like more information about this topic or would like to discuss your matter with a real estate attorney, either post to this blog or contact our office, by email, or call (954) 458-8655 and we will be happy to answer your questions. We offer a free initial consultation.

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