The ease of obtaining loans to purchase houses in the United States distinguishes the country's real estate market from other countries. However, although it may be easier for individuals to obtain home loans in the United States, they may still lose their homes through a legal process known as foreclosure. In the foreclosure process, the bank tries to compel the sale of the house to cover the loan balance from the homeowner who has stopped making payments to the bank. Banks fail to receive payments from borrowers for a variety of reasons. Depending on the state, a bank can either recover the balance through judicial foreclosure granted through a court process or through non-judicial foreclosure. Regardless of how an individual falls into foreclosure, legal strategies exist that a person facing judicial foreclosure may use to save their home.
Seek a Time Extension From the Court
The first judicial foreclosure lawsuit strategy entails requesting a court-ordered time extension. Obtaining a time extension is especially useful in judicial foreclosures because it allows the homeowner to respond to the bank's lawsuit. When the extended period expires, the homeowner must file either a response or a motion to dismiss. A motion to dismiss is a highly effective legal tool. The homeowner asks the judge to dismiss the whole foreclosure proceedings because the bank lacks the legal right and power to foreclose on the homeowner's property. If the homeowner wins the motion to dismiss, the foreclosure proceedings are terminated.
Prove the Bank's Failure to Comply With Procedural Requirements
Another judicial foreclosure lawsuit strategy entails demonstrating to the courts that the bank failed to follow proper procedure. Certain loans are guaranteed by the US government and government agencies, such as the Federal Housing Administration loan (FHA loan), which has pre-foreclosure conditions that require the bank to complete specific tasks before it can begin foreclosing on a person's home. Some of the requirements are relatively simple and can be used against the bank. For example, a bank's failure to mail a delinquency notice to the homeowner or arrange a face-to-face meeting can be grounds for dismissal.
File for Bankruptcy
Filing for bankruptcy is an effective judicial foreclosure lawsuit strategy. Filing for bankruptcy immediately stops the foreclosure process in an automatic stay. Therefore, the bank cannot continue with the foreclosure until a bankruptcy judge reinstates the process. However, declaring bankruptcy can be a difficult task. Some of the advantages of bankruptcy include the ability of the Bankruptcy Court to modify your payment plan, allowing a homeowner to retain their home and make payments that a homeowner can afford.
Talk to a lawyer if you need a judicial foreclosure lawsuit strategy.