The Risks of Mortgage Litigation
For the homeowner who is facing foreclosure and who is unhappy with the level of assistance provided by their lender, mortgage litigation may be the only path to avoiding foreclosure available.
Mortgage litigation is the presentation of a dispute before a court that relates to matters of mortgages, mortgage contracts, and mortgage payments. Foreclosure cases are represented in mortgage litigation since the foreclosure is the attempted enforcement of the mortgage contract by the lender.
Just like any other sort of trial, the outcome of mortgage litigation could go one of two ways: in favor of the borrower or against. The risk of losing at trial is one worry that often keeps many homeowners facing foreclosure from pursuing the option of litigation. They fear that the whole process would be too expensive to justify, especially if they lost, but this is rarely the case.
When a borrower takes their lender to court, it is often in an effort to halt the foreclosure process. If this is the case, as it usually is, then failure to take the lender to court could result in a foreclosure and a verdict in favor of the lender at trial could also result in a foreclosure. Although it may not appear so to the borrower, an outside observer would argue that a trial won’t result in anything bad that the borrower isn’t already facing.
Should the trial judge rule in favor of the borrower, then the borrower will be able to avoid foreclosure by way of court order. Again, to the outside observer looking in on the borrower, it would appear as though the borrower has nothing to lose but everything to gain by taking their lender to trial.
Not only are foreclosure actions put on hold pending the result of litigation, but the borrower is required to make no mortgage payments during litigation, which are additional perks of the process.
Does mortgage litigation carry some risks? Yes, but nothing that could be more devastating than the risks that the borrower is already facing. If the borrower goes to court, they risk losing at trial and winding up back in foreclosure. If the borrower doesn’t go to court, they risk losing their home to foreclosure anyway. If the borrower goes to court and wins, they risk saving their home and returning to a relatively normal way of life. When put in perspective, these risks don’t seem all that bad.
Many borrowers may be surprised to learn that their original mortgage documents actually contain errors and violations of the law that would favor the borrower should the case go to trial. These errors and violations can be uncovered with the help of an experienced foreclosure attorney who can perform an audit of original loan documents to uncover such errors and violat
ns. This kind of evidence against the lender will help the borrower lower their risk of losing their case in court. In some cases, the evidence may be so strong that the lender will simply choose to settle out of court, offering the borrower an automatic win in the form of a more favorable loan modification.