Many borrowers facing foreclosure are exploring their options with mortgage litigation, or taking their lenders to court. There is plenty of information available that informs borrowers about the risks and benefits of mortgage litigation, but few offer insight into what happens after the trial, or how any mortgage litigation verdicts will affect them. It is important to remember that the legal system is fluid, meaning that it changes constantly. One verdict in one case may not be the same as the verdict in a similar case. Different factors affect the outcome of a trial, including the individual judge, the ability of the attorneys to present evidence, and the testimony of the parties involved.
When a borrower takes their lender to court, it is usually over the fact that the lender is attempting to foreclose on the property of the borrower and the borrower is trying to fight them off. A borrower may also pursue litigation if the lender refuses to modify a loan when the borrower feels that they deserve the modification for one reason or another.
Each trial can have different results for borrowers. Most trials end in one of four ways:
–The borrower wins and has all of their demands met, which usually includes a modification of some kind and more often than not the forgiveness of portions of the debt.
–The lender wins and is allowed to proceed with the foreclosure if the borrower can’t pay the necessary debt.
–The case is dismissed for lack of evidence. This usually doesn’t happen since attorneys are pretty good about compiling evidence before a trial, but if a person attempts to sue their lender on their own and fails to gather a satisfactory amount of evidence, they risk having the case dismissed and losing out on the chance to save their home.
–Both parties are forced to compromise. Neither party gets exactly what they want. An example of a compromise might be a judge ordering the borrower to pay the entire requested amount of debt to the lender but allowing the borrower to pay back the amount at a much slower pace than the lender would like.
Once the mortgage litigation verdicts have been handed down, both parties are expected to comply with the decision of the court immediately. If a verdict in favor of the borrower is delivered, the borrower will either be granted damages, a modification plan, or a combination of the two. If the verdict is granted in favor of the lender, they may continue with whatever collection actions they were pursuing before the litigation, which could range from debt collection all the way up to foreclosure of the property. While the case is in litigation, which is before the verdict has been delivered, the borrower is not required to make payments on the loan in question and the lender is required to put a pause on all collection efforts. The lender may not report the non-paying status of the borrower during litigation for the loan in question. This protection is only extended to the loan or mortgage in dispute. This means that if a borrower has a car loan and a mortgage loan through the same lender, and pursues litigation for the mortgage loan, the borrower is still required to make payments on the car loan each month.