I don’t defend mortgage foreclosure suits against my asset protection clients, and instead, I refer people to one of several real estate litigation attorneys who do a good job forestalling foreclosures and negotiating releases of personal liability. I spoke this weekend with one such foreclosure defense lawyer about his foreclosure defense tips.
This attorney said that many people expect him to assert the most aggressive and comprehensive defense against the bank’s foreclosure. Many people have heard of foreclosure defenses based on Truth in Lending violations and technical defects in the bank’s HUD statement and other closing documents. This attorney explained why in his opinion the maximum defense is not always the most practical defense. He said that his clients realize that they cannot ultimately escape foreclosure, but that most are willing to relinquish their home for a release of deficiency liability.
He has found that most large lender foreclosure firms have at least two groups of attorneys. The most experienced litigators deal with the most complicated mortgage foreclosure cases, including those cases where the borrower’s attorneys have raised sophisticated legal defenses. Most foreclosures, including uncontested cases and the basic defenses, including the “lost instrument defense” and technical legal procedure issues, are handled by less experienced attorneys and other staff.
This attorney has found that clients who insist on the more complicated foreclosure defenses find their cases handled by the lender firm’s most expensive attorneys who have a lesser caseload and have more time to expedite the foreclosure. This attorney’s own fees to assemble and prosecute an aggressive defense are many times higher than making an ordinary foreclosure defenses. The ordinary, less expensive defense, usually ends up delaying the bank’s foreclosure more than an aggressive defense because the bank’s attorneys handling these ordinary cases have a much larger caseload and are much less experienced. These bank attorneys typically ignore files or make simple procedural mistakes which delay their own foreclosure.
This mortgage defense attorney summed up his advice as follows. If the bank’s policy is to exchange liability and deficiency releases for relinquishing foreclosure defense then it does not matter, practically, whether the homeowner’s legal defense is complicated and aggressive, or simple and economical. If the bank’s policy is not to give releases then a complicated litigation defense rarely changes the bank’s mind. So, he says, defend foreclosures but keep it simple. That’s one person’s opinion.