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1.1.1 Scope

This treatise provides the law and practical advice concerning mortgage servicing, mortgage modifications, and home foreclosures. It examines these issues not only in relation to traditional free-standing homes, but also with respect to manufactured homes and condominiums. It covers foreclosure upon private mortgages, government mortgages, condominium liens, tax liens, and reverse mortgages. Forfeiture of land installment contracts and a variety of foreclosure rescue scams from equity skimming schemes to phantom help are also addressed.

This introductory chapter provides a practical discussion of how to analyze and defend a foreclosure action. It outlines first steps to take when a client is facing foreclosure, provides an overview of claims and defenses available to homeowners, and just as importantly presents an essential introduction to this nation’s mortgage market and the players involved in that market.

Chapter 2 examines common mortgage servicing abuses that can occur during the life of a loan, from the misapplication of payments and assessment of improper fees to escrow issues and problems that arise after a loan has been paid off or foreclosed. Chapter 3 discusses federal mortgage servicing law under the Real Estate Settlement Procedures Act and the Truth in Lending Act. Chapter 4 discusses the challenges to mortgage servicing abuses available under a variety of state and federal statutes and state common law.

Chapters 5 and 6 examine loss mitigation alternatives available to borrowers. Chapter 5 examines loan modifications, workout agreements, mortgage loan mediations, and other negotiation strategies for dealing with delinquencies. Extensive discussion is devoted to the federal government’s HAMP program, including tips for obtaining non-litigated resolutions to default. The chapter also considers claims that may arise when the servicer fails to consider the borrower for loss mitigation alternatives. Loss mitigation alternatives for and foreclosure of federally held or guaranteed mortgages are discussed in Chapter 6.

Chapters 7 through 12 focus on foreclosure defense. Chapter 7 focuses on the lack of authority and standing to foreclose. Chapter 8 discusses procedural defenses available to prevent or postpone foreclosures, and Chapter 9 discusses claims and defenses that arise from the loan’s origination. Litigation strategies and issues, such as settlement, tax considerations, preemption, and various other doctrines that may limit the ability to bring claims are reviewed in Chapter 10. Using bankruptcy to prevent foreclosure is discussed in Chapter 11. Chapter 12 covers legal issues that arise after a foreclosure sale is completed, including setting aside sales, redemption, defending evictions, and the potential tax consequences of foreclosures.

Finally, Chapters 13 through 18 cover specialized situations where a home may be seized. Chapter 13 examines foreclosure, replevin, and repossession of manufactured homes. Chapter 14 considers forfeiture of land installment contracts, and Chapter 15 covers the foreclosure of condominium and homeowner association liens. Chapter 16 considers foreclosure on reverse mortgages. Chapter 17 reviews tax lien foreclosures. Chapter 18 addresses foreclosure rescue and loan modification scams.