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1.2.6 Analyze the Foreclosure for Procedural Defenses

Borrowers may have defenses to foreclosure where the servicer7 has not complied with procedures required under state and federal law. In many cases, procedural defects result in an invalid sale and require the servicer to reinitiate the foreclosure process. While this may not provide a permanent solution, it gives borrowers more time to mount a defense or find alternative housing.

When examining the sale for procedural defects, ask:

  • Is the entity attempting to foreclose a real party in interest? Generally, the party that possesses the right to collect upon the note is the real party in interest. See Chapter 7, infra.
  • Has the servicer waived the right to require that payments be made on time by accepting late payments in the past? See § 8.3.3, infra.
  • Is the servicer improperly attempting to enforce a due on sale provision? See § 8.6, infra.
  • Has the servicer failed to comply with state foreclosure law? State pre-foreclosure notice requirements, as well as contractual requirements, must be strictly followed. See §§ 8.2.3, 8.3.2, infra.
  • Did the servicer initiate a foreclosure proceeding without first sending an early intervention letter and without waiting until the borrower was more than 180 days delinquent, as required by regulations under the Real Estate Settlement Procedures Act? See §, infra.
  • Did the servicer initiate or proceed with a foreclosure while the borrower was being evaluated for a loss mitigation option or while appealing the servicer’s loan modification application? Regulations under the Real Estate Settlement Procedures Act apply restrictions to servicer’s “dual tracking” practices. See §, infra.
  • Is the servicer complying with the state foreclosure mediation program requirements? See § 8.8, infra.
  • Has the servicer violated a state moratorium on foreclosures? See § 8.8, infra.
  • Is the borrower a servicemember entitled to protection under the Servicemembers Civil Relief Act? See § 8.11, infra.


  • 7 {7} Typically the servicer prosecutes foreclosure actions on behalf of the current holder.