If you are facing a foreclosure on your home, you probably have some questions about what defenses you may have to a foreclosure. Many homeowners believe that since they missed their payments, they have no defense to foreclosure. This is not necessarily true. In Florida, there are many defenses to foreclosure that can help you stop the foreclosure of your home, and hopefully get back on track with your mortgage. Our Melbourne Florida Foreclosure Attorney has advised thousands of Brevard families on their foreclosure defenses. We now share some of that advice with you.
Lack of Standing
The most common defense to a foreclosure in Florida is to challenge the foreclosing bank's right to sue on the loan. The legal defense is called "Lack of Standing," meaning that the bank that filed the foreclosure complaint is not the bank that has the right to enforce your loan. The reason this defense is so prevelant is that in almost every mortgage transaction, there are several banks involved with your mortgage loan. There is typically an "Owner" of your mortgage loan, which is the person that you actually owe the money to. The Owner can change periodically as your loan get's sold from one bank to the next.
Next there is a "Servicer" of your mortgage loan. This is bank that is hired by the Owner of your loan to collect the monthly mortgage payments. This is the bank that sends you monthly mortgage statements. Sometimes the Servicer and the Owner are one in the same. Most of the time they are not. The Servicer can also change during the course of your loan repayment. Because both the Owner and Servicer can change many times, it can sometimes be difficult to determine who you actually owe your money to. To make it worse, most of the major banks (Bank of America, Wells Fargo, JP Morgan Chase, CitMortgage, etc) have portfolios where they act as the Servicer and other portfolios where they are the Owner. In many cases, even the bank isn't sure of its role in your mortgage loan. All this confusion in the mortgage servicing process leads to difficulties for the banks to prove their relationship to your loan. Even when they do know their relationship to your loan, there is another problem they have to overcome.
As stated above, many mortgage loans are transfered from one Owner to the next, and one Servicer to the next. However, there are some legal requirements to complete a valid transfer of your loan. The transferring bank must sign the Original Note to the new Owner through what is called an "endorsement." If the endorsement isn't proper, the new purported Owner does not have the right to enfore the loan. If the new Owner files a foreclosure action on the mortgage, and it is determined by the foreclosure Court that the endorsement from the prior owner was invalid, then the new Owner does not have the right to enforce your loan. The new Owner lacks "Standing," and the foreclosure case is dismissed.
When the foreclosure crisis first started in 2008-2009, the banks had a terrible time proving they were the true owner of the loans. Rather than endorsing and transfering the original notes like they were supposed to, the banks for years were just transfering electronic copies of the loan from one lender to the next. When the last lender filed a forelcosure, they could not locate the Original Loan, which was probably stuck in a warehouse of one of the prior owners of the loan.
Fast forward to today, and the banks have had ample time to locate the original notes and get the proper endorsements. The result is that the "Lack of Standing" defense is getting more and more difficult to establish. That said, the banks still mess up, making this defense the first thing most Florida foreclosure attorneys will look for in defending a foreclosure action.
If you are in foreclosure and think your lender lacks standing, call our office for a free consultation with our foreclosure attorney. We will look through your foreclosure paperwork and discuss all the defenses you may have.
Stay tuned for future articles on foreclosure defenses in Florida.
Bowin Law Group. Brevard's Hometown Law Group