Foreclosure Defense and Predatory Lending Claims

Foreclosure Defense

Although we strive to find foreclosure solutions outside the courtroom, if litigation becomes necessary, such as when a foreclosure is pending or modification is not possible, we will fight aggressively to advance our client’s interests.

A non-judicial foreclosure begins when the lender serves and records a Notice of Default. This is a formal notice requires that borrower pay all past due amounts and trustee fees within 90 days to reinstate the loan and terminate the foreclosure. If the borrower fails to reinstate the loan, the next notice is a Notice of Sale. Once this notice is served and filed, the trustee fees and costs increase substantially. The borrower has 20 days to reinstate the loan or the property will be sold by the trustee. Recent California laws may extend these time periods under certain circumstances.

A judicial foreclosure begins when the lender files a lawsuit against the borrower. Judicial foreclosures are often used when there is not enough equity to pay the lender in full on a recourse loan and the lender wants to get a deficiency judgment against the borrower.

Defending against a non-judicial foreclosure requires that borrower have the financial resources and legal grounds to file a lawsuit and seek an injunction to stop the foreclosure sale. Defenses may be procedural, based on lender’s failure to follow the statutory requirements, or they may be substantive based on borrower’s defenses to the loan such as fraud, breach of fiduciary duty, predatory lending, lack of capacity, duress, undue influence, elder abuse, violation of the Truth In Lending Act (TILA) or violation of the Real Estate Settlement Procedures Act (RESPA).

Cancellation or Rescission of Loans.

When a borrower is induced to sign loan documents as a result of fraud, mistake, breach of fiduciary duty, duress, undue influence, lack of capacity, elder financial abuse, and other circumstances that make enforcement unjust, a court of equity may rescind or cancel the loan provided the borrower repays any money received. Equitable remedies may include reformation of the loan to reflect the true intent of the parties.

Truth In Lending Act (TILA) Violations and Real Estate Settlement Procedures Act (RESPA) Violations.

These important consumer protection acts require lenders to provide full disclosure of all loan costs, the identity of the lender and loan servicer, and prohibit excessive and unearned fees. Violations of these statutes may entitle the borrower to rescind the loan or sue for damages, statutory penalties, and attorney fees.

Predatory Lending Claims

Predatory lending is when a lender makes a loan knowing that the borrower has no ability to repay the loan. The loan is based on the equity in the property. The lender typically charges a high loan fees, high interest, a prepayment penalty, and has a good chance of obtaining the equity in the property through the foreclosure sale followed by a profitable resale. Predatory lending is prohibited by state and federal law. Possible remedies include rescission of the loan, cancellation of the loan, and damages.

Call the Law Office of Michele L. McGill at (415) 334-8080 for a free mortgage modification consultation today.