Blog

Approach Litigation with Caution…You Haven’t Won Yet

Part of the problem with helping people modify their loans or pursue mortgage litigation is that there is never any guarantee that the formerly distressed borrower will keep themselves out of debt after their payments are lowered, they receive a settlement offer, or they win in court.  Some people, no matter how much help they get, just manage to get themselves back into debt faster than they did the first time around.  There are articles all over the web warning borrowers to treat a monthly payment reduction with great care, urging them to put money in one of two places, either away in savings or towards other debts.  The same advice should be taken by borrowers who are taking their lenders to court.

Mortgage litigation is when borrowers and lenders take a dispute over a mortgage contract to court and let a judge decide who is right and who is wrong.  Borrowers who are successful in mortgage litigation may find themselves being awarded damages and/or the holders of a new mortgage contract all together. 

Under the law, a homeowner does not have to make mortgage payments while their case is pending litigation.  This means that while a case is in trial, the homeowner most likely has a few hundred dollars being saved every month.  As mentioned earlier, there is no better place to put that money than in a savings account or towards other debts.  While a case is pending a ruling from a judge, a savings account would be the best place to put that money.  Homeowners facing litigation sometimes forget that a trial can go either way.  Who hasn’t heard the story about the burglar who sued for, and amazingly won, damages against a woman when the burglar injured himself breaking into the woman’s house.  Does this mean that this type of scenario of perverted justice is the norm?  No.  It just means that strange things happen, and the last place a borrower wants to be is on the losing side of a judge’s ruling with no money to make future mortgage payments because all of the money that could have been put away was squandered on useless luxuries.    

Borrowers who are already in debt and facing foreclosure have to be very careful not to fall into any old traps that may have contributed to their original debt.  While it is true that a borrower can’t be blamed for being the victim of fraud, the borrower must take a very careful examination of their current financial situation.  When debt exists, no matter whose fault the debt is, wants must take a backseat to needs.  If ever there was a time to be frugal with one’s spending, awaiting the outcome of a mortgage litigation trial is it.  Just because a mortgage payment is sitting in one’s bank account while the outcome of a trial is decided it does not meant that the mortgage payment has to be spent just for the sake of spending it.  Spending money just because it is burning a hole in one’s pocket is an action of children, not responsible adults trying to pull themselves out of debt.