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What defenses are available in a foreclosure action?

The prospect of facing a foreclosure can be frightening for any homeowner. Whether a person has over-leveraged their finances or is having trouble paying their mortgage for reasons out of their control, losing their home will have negative immediate and long-term consequences for their entire family. If a lender has initiated a foreclosure proceeding already, what defenses are available to homeowners to prevent the foreclosure from being finalized in the lender's favor?

One of the more common defenses invoked by homeowners in foreclosure cases is to require the lender to perfect the chain of title to the property. Essentially, the lender must prove a clear record of ownership between the closing and the time of the foreclosure. An inability to do so creates a defect in the mortgage, deed or promissory note that the lender is attempting to enforce. The sheer magnitude of property transfers leads to mistakes being made by lenders, which may be to the benefit of the homeowner.

Additional defenses may be at a homeowner's disposal under certain circumstances. One such defense is for the homeowner to file for bankruptcy. Under both Chapter 7 and Chapter 13 bankruptcy proceedings, the lender can be required to prove a valid chain of title to the property. Other potential defenses include challenging whether the bank is actually an interested party in the foreclosure proceeding, or arguing that once a loan has been converted to stock, the loan instrument is no longer effective.

A homeowner subjected to the possibility of losing their home will probably want to evaluate any reasonable defenses that may be available to them. A foreclosure defense strategy can assist in the applicability of these defenses to improve the chances of preventing the foreclosure.

Source: debt.org, "Foreclosure Defense," Al Krulick, accessed on June 8, 2015

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