Homeowners and real estate agents are paying money for questionable services. Virtually every day I receive a solicitation for “forensic audits” “quiet title” actions (frequently performed by non-attorneys and this is unquestionably the “unauthorized practice of law” in all 50 states), “mortgage or note trail,” etc.
Many of these services provide a legitimate service and they actually produce the results that they promise. The problem is……how will this help a distressed homeowner or real estate agent?? Let’s suppose that an investigation is conducted into all phases of the distressed homeowner’s acquisition and loan of their property. We can further assume that the investigation reveals serious violations of the Truth in lending Act (TILA), Real Estate Settlement and Procedures Act (RESPA), the Home Ownership and Equity Protection Act (HOEPA), the Uniform Commercial Code (UCC) or various state laws.
So now what?? First of all, violations such as those stated above are not going to stop a foreclosure sale. They are valid and legitimate Affirmative Defenses or a Counter Claim to a foreclosure action. The point in all of this is that the investigative information provided by many of the firms that perform this type of service is 100% accurate and informative and 100% useless unless the homeowner is filing an Answer or Counter Claim to a foreclosure complaint or the homeowner is willing to file a separate cause of action against the lender. However, the mere filing of a separate lawsuit for such violations will not automatically stop the foreclosure or foreclosure sale process. The only action that automatically stops foreclosure is a bankruptcy petition. Accordingly, in order for a distressed homeowner to achieve value out of a forensic audit or other service indicated above, they must be willing to file a cause of action against the lender or include the alleged violations as part of an Affirmative Defense or Counter Claim.
Additionally, the distressed homeowner will have to have sufficient time prior to a foreclosure sale to utilize the information in a productive manner. If they do not have time (six months minimum – prior to sale), the filing of such actions is frequently useless. The distressed homeowner’s rights may not survive after the foreclosure sale as they may lose standing to maintain such an action since they are no longer the owner of the home.
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