Proactive Strategies For Mortgage Foreclosure Defense
David H. Charlip
Many homeowners in today's current economic climate have the prospect of foreclosure looming on the horizon. When you realize that you are "in a hole" and will be experiencing cash-flow problems in the near-term, you need to adopt a proactive strategy to meet and defend an anticipated mortgage foreclosure. If you only have enough money to make mortgage payments for two more months, the best course is to take your last couple of months' payment and use it to retain legal counsel instead of paying it to the bank. In the long run it will not matter if you end up owing the bank a few thousand dollars more because if you cannot, for example, pay $300,000 you cannot pay $305,000 either.
Even absent the retention of legal counsel, you can put the bank on the defensive by sending the bank a qualified inquiry letter under the Mortgage Loan Servicing Act. When prices were doubling on a yearly basis not too long ago and everyone and their mother were brokering mortgages and buying investment property, many errors, inconsistencies and downright abuses were passed through the system and left uncorrected. Many homeowners with mortgages have loan closing documents that do not properly match up with the monthly mortgage payments of principal, interest or escrow they have been paying to the bank. In some cases, the bank has been aggressive with late charges or by requiring additional insurance or by "force-placing" insurance. Each of these situations, will warrant the request by the homeowner for clarification or further information regarding their payment amount, escrow balance or amortization by way of a "Qualified Inquiry Letter" to the bank. Upon receipt of such a letter, the bank has a certain amount of time to respond and to correct the problem. During the pendency of its response, the bank is not supposed to report the loan delinquent or to institute foreclosure proceedings.
Violation of the Mortgage Loan Servicing Act carries with it a $1000 penalty plus attorney's fees. Banks usually settle these cases very quickly because they often have no defense to the violation. Thus, by taking a proactive approach and handling the matter appropriately, you can take a situation where the bank is about to sue you for foreclosure to a situation where you sue the bank first and recover money from the bank, at the same time stalling the foreclosure and limiting adverse credit reporting.
Such approach obviously involves an understanding of the state and federal laws applicable to mortgage loan servicing, fair credit reporting and mortgage foreclosure. Should you need assistance in these areas, please feel free to call the lawyers at Charlip Law Group, LC at 1-800-773-1955 or email
David H. Charlip