Fraud or negligence
A wrongful foreclosure occurs when a bank or other lender improperly foreclose on a property and thereby causes the owner to suffer damages. Lenders often foreclose wrongfully because of bank negligence and resulting errors. An example would be when a bank mistakenly reports that payments are late or that a mortgage is in default. When one lender sells a mortgage to another, records may be misplaced or lost, and some or all payments may not be credited. In such cases, the bank is at fault and foreclosure on the home is unlawful.
Lenders may also be held liable for wrongful foreclosure because of fraudulent practices, fraudulent actions and certain predatory tactics. For example, a lender may trick the homeowner into default by promising a loan modification only after late payments are made.
Breach of Contract
Homeowners may sue a lender for breach of contract if the lender has provided a loan modification and then unilaterally tries to change it. This occurs with regularity as interest rates get higher, property values increase and lenders decide to renege on the modification they gave you a year ago. If you have a modification agreement and the lender suddenly switches the terms unilaterally, this is a breach of contract and you have the right to sue.
You may also sue for if the lender has taken trial payments from you and then denied you a modification with no good reason. This cause of action is called promissory estoppel and it can be asserted if you have made these trial payments based on the promise of a modification. Promissory estoppel is similar to a breach of contract but does not require a written contract.
Lack of Standing to Foreclose
Lack of standing to foreclose may occur if there is a void assignment of your loan at any time in your loan’s history. If your loan was a sub-prime loan originated between 2004 and 2009, there is a good chance that it was sold to a real estate investment trust (REIT) and the assignment may have been illegal and void. One of the ways we assert wrongful foreclosure is through the use of a loan audit, along with a review of the documents recorded by your lender with the local county recorder. The part of the loan audit that tracks your loan’s purchase into a REIT is called a securitized audit or a Bloomberg audit.
You can best fight a wrongful foreclosure by catching the bank’s mistake early and notifying the bank of all errors. When the bank is given notice that its information is incorrect, it should not proceed with a foreclosure. One way our attorneys assist clients in stopping foreclosures is through audits. In a regular audit, we conduct an investigation of all recorded documents relating to the loan with the goal of finding evidence of fraud by the lender. A securitized audit also called a Bloomberg audit, tracks your loan when it is sold to a REIT and becomes part of a pool of loans bought and sold like stocks. A securitized audit includes a title search, review of documents for fraud, the name of the REIT that bought the loan and other relevant information.
Breaks in the chain of title may be discovered during the Bloomberg audit and provide evidence in a client’s case. These are tools that are best used effectively in the hands of an experienced attorney because there are always multiple issues to consider. In a non-judicial state such as California, the fact that the deed of trust has become separated from the promissory note is not sufficient grounds to stop a foreclosure, but it is a piece of the puzzle. Many additional facts may contribute to your case, such as showing that the lender no longer has possession of the note or the deed of trust or that the original note cannot be found, or showing that there are mistakes in the recorded documents that reveal fraud.
If you are post-foreclosure and have already lost possession, an eviction defense attorney at Advocate Legal can sue your lender while also working to keep you in your home as long as possible.
Contact Attorneys Dedicated to Fighting for the Rights of Homeowners
Lenders and servicers are not on your side and will do almost anything to avoid modifying your loan and to trick you into foreclosure. You need an advocate who will be on your side and who knows the tricks the lenders play. At Advocate Legal, our attorneys devote their time and resources to protecting the rights of homeowners facing wrongful foreclosure. To learn how we can help you, contact our firm online to schedule an appointment.