What is Mortgage Litigation?

Litigation is a general legal term that describes a lawsuit or dispute before a court.  If a mortgage lender and borrower are unable to reach an agreement on a matter such as a loan modification, mortgage litigation may be necessary.  Under mortgage litigation a borrower will have their chance to explain to the courts why they think their lender is being unreasonable.  Similarly, the lender will have the same opportunity.

Many lenders prefer to avoid litigation because legal fees can be so costly.  Lenders may also avoid litigation to avoid bad press and to avoid the disclosure of sensitive company information.  Throughout the course of the litigation, both parties will have an opportunity to present evidence that can support or validate their position.  Evidence may include financial information, mortgage documents, HAMP program requirements, etc.  If a mortgage loan modification dispute gets to the point of litigation, it will be a matter the lender takes very seriously.  If a borrower feels strongly about their position in the mortgage loan modification negotiations and the unreasonableness of the lender, hiring an experienced mortgage litigation attorney is the next step to defending their position and resolving the dispute.  Although hiring an attorney for mortgage litigation costs money, it can save the homeowner much more in the long run in the form of reduced payments and interest rate.

Once a mortgage litigation attorney is retained, the homeowner need not appear in court for routine hearings such as case management conferences and scheduling conferences.  This option is beneficial to borrowers who need to go to work each day, or need to continue looking for a job during the litigation process.  This can be significant as cases often drag on for months with many necessary court appearances that can not be ignored.  In most cases, judges are quite understanding in regard to parties maintaining their employment during a litigation.

Although most borrowers would avoid litigation if possible, mortgage litigation can come with great benefits as well.  It requires a mortgage company to hire an attorney and forces a representative of the company, and their attorney, to look closely at the negotiation process and what has transpired.  Often times lenders will generally ignore borrowers requests for loan modification, a mortgage lawsuit takes the option of ignoring the borrower off the table.  Another benefit of is the involvement of a judge in the mortgage negotiation process.  A homeowner will know they’ll get fair consideration with an impartial judge looking over allegations and negotiation documents, if the case even gets to that point without settlement.  By law, all mortgage litigation matters must involve settlement discussions through the court’s mandatory settlement conference procedures.

Each homeowner’s situation is different, but those wishing to keep their property despite the lenders refusal to cooperate with loan modification negotiations or a lenders failure to hold up their end of the bargain after a “trail modification” should seriously consider mortgage litigation.  It may cost some money at the beginning, but staying in the home and securing a favorable loan modification can be well worth the cost of hiring an attorney.  It is important to only consider an experienced and qualified mortgage litigation attorney who has been through the process before and knows what to expect.