*A Mortgage Foreclosure Defense Primer
by Morton J. Grabel, Esq.
In California, the mortgage home foreclosure process proceeds without court intervention. This is called a “non-judicial foreclosure”. Because non-judicial foreclosures begin without papers being filed by the lenders/trustees in court, you must file a lawsuit to stop the foreclosure.
You will be the “Plaintiff” filing a lawsuit to stop the foreclosure. As Plaintiff, you will have the burden of proof because you want the judge to stop the foreclosure. Remember: the foreclosure was already authorized by you in the loan papers you signed when you got the loan. In those papers you agreed to the foreclosure process automatically, non-judicially, without court.
As Plaintiff, you must sue the lender and the foreclosing agent (typically, the trustee) to stop the foreclosure. In the lawsuit, you will be asking the court to enjoin (stop) the foreclosure process until a judge can hear your case in court as to why the foreclosure shouldn’t proceed. There are many good reasons to stop the foreclosure. In subsequent articles we will address them.
In this kind of lawsuit, plaintiffs usually ask the court for three things, and in this order:
• a temporary restraining order
• a preliminary injunction, and
• a permanent injunction.
Your application for a temporary restraining order (TRO) must convince the judge you will suffer “irreparable injury” if the judge doesn’t stop the foreclosure immediately. Because you will lose your home, most judges understand foreclosure causes irreparable injury. Unless the judge does not think you have a chance at winning the law suit at all and will deny your TRO.
Sometimes the judge may grant the TRO, but require you to post a bond to protect the lender/trustee from economic harm in case you lose. You might be able to get the bond requirement waived by a good argument such as your income is low or the delay will not cause unreasonable harm to the lender or you might be able to strike a deal with the lender/trustee.
The TRO lasts until there is hearing on whether the court should issue a preliminary injunction – which would stop the foreclosure pending a full trial on the matter.
At the preliminary injunction hearing, the judge must decide whether:
• you are likely to prevail at a trial, and
• the injury you would suffer from the foreclosure outweighs the injury the foreclosing party is suffering such as not getting paid right away. The judge “balances the equities”.
If the judge decides these issues in favor of the lender/trustee, the TRO will end, your lawsuit dismissed and you lose your home, unless a deal can be worked out with the lender/trustee.
But if the judge decides in your favor, the judge will issue a preliminary injunction. The preliminary injunction may order the foreclosing party to take various actions for example, such as keeping the TRO thereby stopping the sale. The judge may also recommend mediation.
REMEMBER: The burden is on you to prove the foreclosing party didn’t comply with federal or state laws or the terms of the deed of trust. You could meet this burden with various documents, declarations or affidavits that establish the facts you believe entitle you to stop the foreclosure.
Also, some lenders/trustees have been known to commit “dual tracking” of your account; they accept your loan modification papers and discuss with you a loan modification possibility while attempting to foreclose on your home, all at the same time! This is against the law.
Consider Recording a Lis Pendens:
Instead of seeking a TRO or preliminary injunction to delay the fore¬closure sale until you can have a hearing, you may consider recording a “lis pendens” and filing a regular civil complaint attacking the foreclosure. A lis pendens is a document providing notice to the world that title to the property is a subject of litigation. As long as it is on record, any sale of the property can be undone if your lawsuit succeeds, because the buyer had notice of the controversy. Also, no title company will insure title to property subject to a lis pendens. You may even consider filing a TRO and a Lis Pendens at the same time.
Due Process even in a Nonjudicial Foreclosure:
When attempting to foreclose on your house, keep in mind the lender must comply with:
1. California laws, notice requirements and
2. the terms of your deed of trust.
3. and also due process requirements of the United States Constitution.
For further information contact the Law Offices of Morton J. Grabel, Esq. at 951-658-7000. Attorney Grabel is a graduate from an ABA Law School, a Licensed Real Estate Broker and an experienced civil and criminal litigator.
