June 23, 2011

We have recently received a literal avalanche of inquiries in view of the now almost daily positive developments in court decisions as to issues such as those surrounding MERS, securitization, real party in interest, and the like. The problem, however, is that a great number of these inquiries are from borrowers whose cases have already gone to final judgment or whose properties have already gone to sale.

All of the information on the “other blogs” is great, but what these other blogs do not talk about is PROCEDURE. All courts in all jurisdictions, state and Federal, have specific timing requirements for asserting defenses to a foreclosure. The very Summons that accompanies a Complaint for Foreclosure in a judicial state has a specific number of days set forth in which any papers must be filed in response to the Complaint. If not, the foreclosing party may seek the entry of a default and a Final Judgment, as there is nothing in the court file from the borrower telling the court that they have defenses.

In the non-judicial states, a challenge to a foreclosure generally has to be made PRIOR to the sale. As we have repeatedly pointed out on this website, Washington state, for example, has a “use it or lose it” statute which provides that if a borrower does not challenge the sale prior to the sale date that the borrower is thereafter FOREVER barred from seeking to undo the foreclosure, and the ONLY remedy is damages. Although some jurisdictions permit a borrower to raise defenses to a foreclosure in an eviction proceeding, there are timing requirements for this as well.

Substantive defenses are meaningless without their being asserted pursuant to the proper procedures and within the timing requirements of court rules. Those websites which are managed by non-litigators who do not actually practice in court are thus giving borrowers false hopes if they do not qualify their information by stating that all such matters must be properly and timely raised by an attorney who regularly practices in this area.

We have seen many, many situations where a borrower pulled something off of some blog or website and tried to bring it up after a Final Judgment has been entered or on appeal when the matter was not raised before the case was appealed, and they are shocked and angered that the court did not accept their “defense” because it was not timely raised. The court is just following the law as to procedure, which is equally if not more important than the substantive law.

We have also seen many cases where the borrower claims that they were in “loan mod negotiations” and were told “not to worry” about the foreclosure, and did nothing to defend the case. If a borrower is told “not to worry about the foreclosure”, then the borrower needs to let the court know that, in writing filed with the court and copied to the foreclosing party’s attorney setting forth names, dates, etc., and do so IMMEDIATELY after the borrower is told this and within the response timeframe of the court rules. Remember, the Court only knows what is in the court file, and if there is nothing, the court presumes that the borrower chose not to defend or has no defenses. Trying to bring it up after the fact will most likely not work.

Jeff Barnes, Esq.,