Foreclosure Defenses- A Conservative Perspective

The Wall Street Journal has an article today about the attorneys who have done some of the litigation and discovery that has uncovered alleged “robo-signers.  Clearly, there is no excuse if employees of the banks have made false representations in documents, but this issue begs the question of the impact any misrepresentations should have on the foreclosures, and of the broader defense claims  to foreclosures.  Article below:

Paperwork Trail: The Lawyers Who Fight Foreclosures – WSJ.com.

On the broader question of foreclosure defenses, it appears that foreclosures should be  a fairly  simple process, and in fact half of the states in this country do not require a legal case to be filed to effect a foreclosure.

The foreclosure question is what are the terms of the mortgage, and are you in default under the terms of the mortgage.  If you have not made payments for 6 months, you are going to be in default.

Once it is determined you are in default, the only remaining material questions are determining the amount owed on the note with any contractual penalties and interest, needed to establish any deficiency judgment amount, or rarely, if there is equity in the house after the amount of the note is satisfied.

So, other than a defense to foreclosure that payments have been timely made, and note is not in default, or possibly a defense to the total amount of the debt due and owing, which potentially would be an issue in many states in a separate action for a deficiency judgment, what other defenses should remain?

Does it even matter who owns the mortgage note? Clearly, it matters to the owners of the note, but this should be basically legally irrelevant from a home owner’ perspective – 6 months in default, it is clear that someone else other than the homeowner has a better title at that point.

There are no economic free rides, so someone is paying the cost in a case such as the Jacksonville case, where the homeowners have been living in a home they have not paid a mortgage on for five years. Everyone still making mortgage payments should be outraged.

Misrepresentations under oath must always be punished, but it appears that the alleged misrepresentations have no bearing on the underlying homeowner obligations, and should therefore not be a basis to defend being in default on a mortgage.