Fight the Foreclosure… or the Mortgage? (Education, Not LEGAL ADVICE)
Mortgagors need mostly to understand the predisposition of the court to go along with a foreclosure effort comes from these rights declarations
Florida Constitution, Article I, Declaration of Rights:
SECTION 2. Basic rights.—All natural persons, female and male alike, are equal before the law and have inalienable rights, among which are the right to enjoy and defend life and liberty, to pursue happiness, to be rewarded for industry, and to acquire, possess and protect property; except that the ownership, inheritance, disposition and possession of real property by aliens ineligible for citizenship may be regulated or prohibited by law. No person shall be deprived of any right because of race, religion, national origin, or physical disability.
SECTION 9. Due process.—No person shall be deprived of life, liberty or property without due process of law, or be twice put in jeopardy for the same offense, or be compelled in any criminal matter to be a witness against oneself.
SECTION 10. Prohibited laws.—No bill of attainder, ex post facto law or law impairing the obligation of contracts shall be passed.
Redress of Lender / Mortgagee Injury
Lenders/Mortgagees lend their money to mortgagors who give mortgagees legal ownership of the realty purchased with that money until the mortgagor has discharged the note by paying in accordance with its terms. Failure to pay injures the lender/mortgagee. The court must give redress for the injury, and neither the legislature nor the court shall make any law impairing the obligations of the note and the mortgage which, in combination, constitute a contract.
Why Foreclosure Plaintiffs Win… Virtually Always
It's that simple. SO … EVERY EFFORT to circumvent that redress such as by pointing to defects in the foreclosure process, will eventually meet with defeat UNLESS the foreclosure plaintiff so abuses due process as to anger the judge, who sends the plaintiff forth without day. Typically, even when the defendant wins on some technicality, the bank plaintiff will repair the technical defects and refile or appeal, and THEN win. That's how important Article I Section 21 becomes to Florida judges. They have sworn an oath to support, protect, and defend the Constitutions, and mostly they try to comply. One might find violations of some law that will result in a fine or penalty against the mortgagee/plaintiff/plaintiff's agents. But the borrower will still lose the house.
Mortgagors should ask: "Do attorneys commit malpractice who merely fight the foreclosure without contracting an expert to examine the mortgage for causes of action?"
How Aggressive Mortgagors Can Win
Find the Causes of Action against the Lender and Lender's Agents
Now, if the foreclosure victim or anybody with an upside down mortgage examines the mortgage for contract breaches, tortious conduct, and legal errors, that could change things. All of those constitute injuries of the borrower by the lender or lender agents. If the borrower can prove those injuries, such as loan application or appraisal fraud, the borrower now has right to access the court for redress of injury, and the right to justice. The court will typically bend over backwards to give redress for genuine injury. The mortgagor's attorney might show the causes of action to the mortgagee/assignee of the note and negotiate a settlement in the form of loan balance reduction, or house free and clear. Failing that, the attorney might litigate against the lender and the court, as a consequence of proof of injury and damages, might order redress in the form of loan balance reduction, house free and clear, legal fees and costs paid, and a cash award in the thousands to millions of dollars.
Negotiate A Financially Safe Exit
The mortgagor knows that it makes no sense to fight the lender/mortgagee if the fraud examination discloses no causes of action. Such mortgagors should prepare to leave the property in such a way as to avoid foreclosure and a consequent collapse of credit.
A loan mod makes no sense unless it constitutes a mere cram down of the loan balance to existing property value minus paid-in equity, and a going-rate of interest for a term suitable to the mortgagor. However, one can stop the foreclosure by asking for a loan mod.
Meanwhile, the mortgagor should make the property ready for sale, and put it on the market for the highest possible price, and settle for a short sale if necessary. In the end, if no sale becomes possible the mortgagor can lobby the lender for a keys-for-cash deal. In many if not most cases, the prudent mortgagor can save mortgage payments, add the keys-for-cash money, leave the house, rent for a while, and buy a house at auction or in a depressed community for cash on hand, free and clear. Any negotiated exist can minimize damage to the credit rating.
Summary and Conclusion
The foregoing realities should condition one's approach to dealing with mortgagees, either in or out of foreclosure. It's better to be the dog than the dog meat.