Virtually every day, I receive a call from a real estate professional or home owner that inquires about filing "the lawsuit" to stop a foreclosure. It seems that many believe the separate lawsuit (or a lawsuit in the even of a non judicial foreclosure) will stop the foreclosure process. Where does this come from??
The theory is that a lender may have violated the Truth in Lending Act (TILA) Real Estate Settlement Procedures Act (RESPA) or various other federal and state laws and that this will remove a property from foreclosure.
This would rarely be the case. If a home owner is in judicial foreclosure, such claims would either be an affirmative defense to the foreclosure lawsuit or a counter claim against the lender. In the case of a counter claim, it should be made part of the claim against the home owner. As an affirmative defense or counter claim, the claims of the lender and home owner will be heard as part of the same action.
In a non judicial foreclosure matter, there is no legal case in which to assert an affirmative defense or counter claim. In such cases, the home owner may file a separate action against the lender. However, this legal proceeding is not likely to result in delay or termination of the foreclosure sale. I have never seen an instance in which a judge ordered adjournment of a foreclosure sale based upon allegations in a legal action in which the home owner asserts violations of TILA, RESPA, or other forensic audit issues.
If a home owner has legitiamte claims against the lender, the remedy will be money damages. However, if the home is sold at foreclosure auction BEFORE the adjudication of the money damages claim, the home owner may lose standing to assert their rights in the suit for money damages since they no longer own the home.
Comments(4)