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Mortgage Servicing and Loan Modifications: 11.2.1 Client Interview

The client interview process is critical in evaluating the homeowner’s potential defenses to foreclosure and affirmative claims. The initial interview defines the scope of the legal services needed based on the problem and the homeowner’s goals. The first client interview also shapes the homeowner’s perception of the lawyer.

Mortgage Servicing and Loan Modifications: 11.3.1 Introduction

Foreclosure cases often involve hundreds, if not thousands, of pages of documents. Ensuring that documents necessary to prove your case are admissible is critical to a successful case. Conversely, excluding inadmissible documents offered by a lender or mortgage servicer can also affect the case outcome. This section considers the application of the Federal Rules of Evidence to various common foreclosure related documents.

Mortgage Servicing and Loan Modifications: 11.6 Bond Requirements

The Federal Rules of Civil Procedure and many state rules of civil procedure permit courts to issue preliminary injunctions or temporary restraining orders only if the movant gives security in an amount the court considers proper.406 Federal Rule of Civil Procedure 65(c) allows a court to grant preliminary injunctive relief “only if the movant gives security in an amount that the court considers proper to pay the costs and damages sustained by any party found to have been wrong

Mortgage Servicing and Loan Modifications: 11.7.1 Introduction

A number of doctrines may limit the ability of federal courts to decide or revisit certain matters. In particular, the homeowner’s ability to challenge a mortgage transaction or foreclosure in federal court is complicated when there is a related state court proceeding. These issues may arise when the homeowner files an action in federal court to rescind or challenge a mortgage transaction and there is a threatened, pending, or concluded action in state court to foreclose on the home or to evict the homeowner.

Home Foreclosures: 8.1 Introduction

This chapter provides general guidance on litigating foreclosure and mortgage servicing related claims and defenses. The chapter is intended to be used in conjunction with all the chapters in this treatise, which discuss substantive and procedural defenses to foreclosures.

Mortgage Servicing and Loan Modifications: 11.2.2.1 Overview

Mortgage loans typically involve a thick stack of paperwork. Some of these documents are required by federal or state law. Others are used because of industry custom or lender practice. Some documents, such as a pooling and servicing agreement or an assignment, may be generated after the loan closing as the loan travels through the secondary mortgage market. Mortgage servicers also generate records, such as payment histories and escrow account information, which may be relevant to a homeowner’s claims.

Home Foreclosures: 12.1.1 Introduction

Most of the basic principles that apply when a lender forecloses upon a first mortgage also control when the foreclosure involves a second mortgage. However, second mortgage foreclosures present distinct issues that advocates must be prepared to address. The following two sections of this chapter review general rules that apply in two distinct scenarios. The first considers the impact of foreclosure of a senior mortgage when the same property secures one or more junior mortgages.

Home Foreclosures: 9.11.1 Overview

Filing a bankruptcy that does not fully address a mortgage delinquency may impact future legal proceedings and negotiated agreements seeking to avoid foreclosure. Even when the bankruptcy does nothing more than create temporary delay, either because the mortgage holder gets relief from the stay or the case is completed without resolving the delinquency,578 it may nevertheless have an impact on future efforts to prevent foreclosure.

Home Foreclosures: 9.2.1.2 Chapter 7 (Straight Bankruptcy)

In bankruptcy cases under chapter 7, the debtors file a petition asking the court to discharge their debts. The basic idea in a chapter 7 bankruptcy is to wipe out (discharge) debts in exchange for giving up property, except for “exempt” property that the law allows the debtor to keep. In most consumer cases, all of the debtor’s property will be exempt. But property that is not exempt may be sold, with the money distributed to creditors.

Home Foreclosures: 9.3.6.2 Violations of the Stay by Government Entities

Another issue which unfortunately often arises are the remedies available against government entities for violations of the stay. If the stay is violated through state action as defined for purposes of the civil rights laws,150 remedies under 42 U.S.C. § 1983 may be available against officials who violate the stay under color of law. This is because a violation of 11 U.S.C.

Student Loan Law: 10.6.2.5.4.1 The group discharge process

The 2016 borrower defense regulations that went into effect in October 2018 established specific procedures through which the Department may provide relief to groups of borrowers who attended a school where widespread school misconduct is found, or where there are otherwise “common facts and claims” that support providing relief through a group process.593 Unfortunately, only the Secretary may initiate a group process under these regulations, and a Department official—rather than a borrower’s lawyer or

Home Foreclosures: 14.2.4 Premature Foreclosure

When an association forecloses a lien pursuant to the rules set out in its declaration and in the state condominium act, an argument that foreclosure was invalid because it was premature may be difficult to sustain.125 However, even when an association seeks to foreclose a valid lien on a condominium unit and complies with the governing statute, a court may nevertheless deny a judgment of foreclosure if it considers the suit premature under the particular circumstances of the case.

Home Foreclosures: 14.3.4 Reasonable Rental Claims by Association During Foreclosure

A number of state condominium laws provide that in any foreclosure, the unit owner is obligated to pay a reasonable rental for the unit during the foreclosure process, if so provided in the association’s bylaws, and the plaintiff in such foreclosures is entitled to the appointment of a receiver to collect the rental payments.211 Where an association’s declaration, but not its bylaws, requires the payment of reasonable rental, and the statute specifically mentions bylaws but not the declaration, a court should deny an award of reasonable renta

Home Foreclosures: 14.4.2.1 Challenging Assessments and Fees

A common problem for unit owners in many states is that it may not be practical to assert a counterclaim in a suit brought to collect assessments, fines, or other fees that is based upon the reasonableness of the charge at issue.271 This is true even when the owner genuinely believes that the charge is not lawful or that a valid reason or justification exists for not paying the charge that underlies the lien.

Home Foreclosures: 12.2.2 The Statute of Limitations for Individual Installments

When a mortgage or deed of trust has not been accelerated, a limitation period typically runs from the due date of each individual unpaid installment.26 For example, New York’s statute of limitations for mortgages is six years. An individual installment that came due and remained unpaid for six years with no acceleration of the loan can no longer be collected in a legal action.27 This principle can be particularly important in defending against a second mortgage foreclosure.