Full question:
During 4/09 I had a Taylor/Bean mortgage that was in the loan mod process. 6/28/09 Taylor/Bean sends notice of loan mod 3 month trial payments, 1st being due 7/01/09. On 7/04/09 1st payment received by T/B. On 7/09/09 T/B forecloses on property recording it on 7/27/09. 8/02/09 2nd payment is received. 9/01/09 3rd payment received. 10/29/09 I receive a letter from OCWEN Loan serving, LLC with my Sept loan mod payment, 'insufficient to cure default'. I call the phone number provided, give them my loan number, and after three dept redirections, they tell me that Freddie Mac holds title now and they can't help me. Long story shortened; can I file a civil suit against them or put an involuntary lien against the property to stop an further sales of my home. Additionally what happened to my payments for July and August? Nobody seems to care or have any answers; however my family and I still live at the property, and I have no intent on leaving. Do I have any legal recourse?
- Category: Real Property
- Subcategory: Foreclosure
- Date:
- State: Nevada
Answer:
During the past decade, mortgages were sold and resold, bundled into securities and sold to investors. It is usually legal for a lender to assign a borrower's contract to another as long as the terms of the contract don't prohibit the assignment. However, it is common for mortgages to be sold or assigned to another company, and the borrower is not relieved of obligations for payments. etc. by the assignment.
In many cases, the original note signed by the homeowner was lost, stored away in a distant warehouse or destroyed. Persuading a judge to compel production of hard-to-find or nonexistent documents can, at the very least, delay foreclosure, buying the homeowner some time and increasing the pressure on the lender to renegotiate the mortgage. The original note is almost always electronically retained and can eventually be found.
Judges are often willing to accept electronic documentation. Lenders are sometimes allowed to produce other paperwork to establish they are the holder of a loan. There have been cases where the foreclosure action was thrown out because of a failure to produce the note, but it will be a matter of subjective determination for the court to decide if the foreclosure may proceed.
In foreclosure lawsuits, the debtor typically asks the court for three things, in the following order:
-a temporary restraining order (which lasts for a certain number of days, typically under 2 weeks)
-a preliminary injunction (will last until the court decides the case), and
-a permanent injunction (which will be granted if you win your case).
An answer is a legally sufficient response to the allegations that have been alleged against you in the complaint. The answer will generally either admit or deny each claim made by paragraph, or state an inability to admit or deny for lack of knowledge. Defenses may also be raised. Lack of funds and inability to pay is not considered a valid defense. A valid defense may include such excuses as identifying the incorrect borrowing party to the loan contract, or having made all payments on time, among others. The answer is an opportunity to show why the property shouldn't be foreclosed upon. Lack of funds and inability to pay is not considered a valid defense. A valid defense may include such excuses as identifying the incorrect borrowing party to the loan contract, or having made all payments on time, among others. The answer is an opportunity to show why the property shouldn't be foreclosed upon. A lien is asked for when someone else owes you a debt and doesn't pay, so typically one doesn't put a lien on property owned by themself, it is another's property that the lien attaches to.
Types of Foreclosure.
The mortgage holder can usually initiate foreclosure anytime after a default on the mortgage. Within the United States, there exist several types of foreclosure. Two are widely used, with the rest being possibilities only in a few states.
The most important type of foreclosure is foreclosure by judicial sale. This is available in every state and is the required method in many. It involves the sale of the mortgaged property done under the supervision of a court, with the proceeds going first to satisfy the mortgage, and then to satisfy other lien holders, and finally to the mortgagor. Because it is a legal action, all the proper parties must be notified of the foreclosure, and there will be both pleadings and some sort of judicial decision, usually after a short trial.
The second type of foreclosure, foreclosure by power of sale, involves the sale of the property by the mortgage holder not through the supervision of a court. Where it is available, foreclosure by power of sale is generally a more expedient way of foreclosing on a property than foreclosure by judicial sale. The majority of states allow this method of foreclosure, inclusing New Hampshire. Again, proceeds from the sale go first to the mortgage holder, then to other lien holders, and finally to the mortgagor.
Other types of foreclosure are only available in limited places and are therefore considered minor methods of foreclosure. Strict foreclosure is one example. Under strict foreclosure, when a mortgagor defaults, a court orders the mortgagor to pay the mortgage within a certain period of time. If the mortgagor fails, the mortgage holder automatically gains title, with no obligation to sell the property. Strict foreclosure was the original method of foreclosure, but today it is only available in New Hampshire and Vermont.
Statutory Redemption.
Statutory redemption allows the mortgagor to redeem the mortgage even after foreclosure sale. About one-half the states have statutory redemption laws. Generally, these laws give anywhere from six months to a year for the mortgagor to redeem the mortgage by payment of the foreclosure sale price plus a statutory rate of interest to the sale purchaser. Junior lien holders also have a right to redeem under these statutes, in order of their priority, though not until the period for the mortgagor to redeem runs out. As a rule, the mortgagor can retain possession of their property during this statutory redemption period. New Hampshire has no post-sale statutory right of redemption for foreclosures, which would allow a party whose property has been foreclosed to reclaim that property.
Federal Laws Affecting Foreclosure:
At least two federal laws clearly apply to foreclosure actions.
Bankruptcy.
The filing of any bankruptcy action automatically stays a foreclosure proceeding, regardless of type. At that point, whether the stay will be lifted depends on whether the mortgagor has equity in the mortgaged property. If the bankruptcy has been filed under a Chapter 11 petition, the bankruptcy court may "terminate, annul, modify or condition such stay" for cause, including the lack of adequate protection of an interest in property of the mortgage holder, or if the mortgagor does not have equity in the property and the property is not necessary for an effective reorganization.
If it has been filed as a straight bankruptcy petition, asking for discharge of all debts, the mortgage holder will be allowed to foreclose if the bankrupt debtor has no equity in the property. If there is equity in the property, the property can be sold by the bankruptcy court.
Servicemembers Civil Relief Act of 2003.
The Servicemembers Civil Relief Act of 2003, replacing the Soldiers and Sailors Relief Act of 1940, gives special protection to mortgagors on active duty in the armed forces for mortgage loans executed prior to when they went into service. The Act provides that a service person can apply to a court to set aside a default judgment leading to a foreclosure action. Because of this provision, a mortgage holder initiating a foreclosure action against a mortgagor who fails to answer the foreclosure complaint must file an affidavit with the court stating the mortgagor is not on active duty in the armed services.
If the mortgagor is in the armed services, the individual must be present or represented at the foreclosure hearing, meaning foreclosure by power of sale is not available. If a court finds that the mortgagor's ability to meet the terms of the mortgage has been affected by their service in the armed forces, they can stay the foreclosure action as long as the person is in the service.
Nevada allows the lender to get a deficiency judgment against the debtor is the property sells for less than the amount owed by the debtor. The following is a Nevada statute:
NRS 40.455 Deficiency judgment: Award to judgment creditor or beneficiary of deed of trust.
1. Upon application of the judgment creditor or the beneficiary of the deed of trust within 6 months after the date of the foreclosure sale or the trustee’s sale held pursuant to NRS 107.080, respectively, and after the required hearing, the court shall award a deficiency judgment to the judgment creditor or the beneficiary of the deed of trust if it appears from the sheriff’s return or the recital of consideration in the trustee’s deed that there is a deficiency of the proceeds of the sale and a balance remaining due to the judgment creditor or the beneficiary of the deed of trust, respectively.
2. If the indebtedness is secured by more than one parcel of real property, more than one interest in the real property or more than one mortgage or deed of trust, the 6-month period begins to run after the date of the foreclosure sale or trustee’s sale of the last parcel or other interest in the real property securing the indebtedness, but in no event may the application be filed more than 2 years after the initial foreclosure sale or trustee’s sale.
(Added to NRS by 1969, 573; A 1979, 450; 1985, 371; 1987, 1345)
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.
