The Foreclosure Process: How to Stop Foreclosure

Are you facing foreclosure and looking for more information about the foreclosure process? This site is designed to help you understand the foreclosure process and how you can save your home.

The foreclosure process is different depending on which state you live in. If you live in one of the Eastern States, then chances are that likely, you are in a Judicial foreclosure process state. If you live n Washington, Oregon, California, Nevada, Arizona, etc, then chances are you live in a Non-Judicial foreclosure process state.

Introduction to the Foreclosure Process

When you closed your loan, you signed two documents: The Promissory Note and a Deed of Trust (in a Non-Judicial State) or a Mortgage (in a Judicial State).

The Deed of Trust/Mortgage is recorded at the County Hall of Records and it is this instrument that gives your lender the “Due on Sale” clause when they sell your property in the event of a default.

However, the first document; the Promissory Note, is the most important document that most lenders do not own or possess as required by law. You see, under US Supreme Court ruling in Carpenter v Longan, it was ruled that for a party to be entitled to enforcement of the promissory note, they must be the owner of the note. Here’s the deal: most “lenders” do not own or possess the note. They are just servicers….

However, before we go into how to defend your home from foreclosure, we need to go briefly into the foreclosure process.

The Judicial Foreclosure Process

In a Judicial State, the foreclosure process involves the “lender” (who actually is a servicer) to hire a foreclosure mill and file a law suite and sue you once your loan is in default.

Typically, after 3 to 6 months of non-payment, depending on your State and which bank, your lender will file a Notice of Default at the County Hall of Records against you and your property. They will then send this notice to you via certified mail.

Then, depending on your State, you will be given a certain number of days to cure this default, typically this varies between 30 to 90 days. After this time, the “lender” (servicer) will then file a civil action against you. This involves them claiming that you have defaulted on the mortgage, and requiring you to answer the action within 30 days or appearing in court to defend yourself.

It is here that most homeowners lose because they simply do not know their options or rights. Most homeowners simply don’t respond and/or don’t show up at their court appearance and end up losing their homes by default.

As a homeowner, you are protected not only under your State’s foreclosure laws, commercial laws but also under the Constitution of the United States. You are entitled to proper due process of the law, and against illegal search and seizure of property.

You see, these “banks” are literally stealing people’s homes without any real authority to do so. They are relying on your ignorance. They are relying on the court system’s ignorance. And they are getting away with this every single day.

We will go into more detail about this later.

The Non-Judicial Foreclosure Process

In a Non-Judicial state, your foreclosure is handled without any court involvement. In other words, the “lender” (or anyone else) can literally foreclose on anyone if they put in the proper paper work as governed under the State’s Civil Code governing the foreclosure process.

After 3 to 9 months after non-payment, the “lender” will file a Notice of Default and record this against the County Hall of Records. Again, depending on your State you will have between 3 to 6 months to bring this loan current to cure the default. They are required to send you this notice along with the Notice of
Substitution of Trustee to you via certified mail.

The “lender” also file a Notice of Substitution of Trustee with the County. When you originally signed your loan, you appointed an initial Trustee (this is usually the same company you went to to sign your closing documents). When your “lender” wants to foreclose, they then appoint a substitution Trustee who will administer the foreclosure process.

After the passage of 3 to 6 months, your “lender” will then send a “Notice of Trustee Sale”, which usually gives you a date between 30 to 60 days out. They usually send it to you in both regular and certified mail.

Then on the date of the sale, an auction is typically held at the local court house. Your house goes on bid to the highest bidder. By default, your “lender” will usually bid 1 dollar above the loan amount…using the delinquent amount as their payment. In other words, they do not have to put up any of their own money.

Once the house is sold, if it goes to the “lender”, then the lender will typically give you another 30 to 60 days to move out. If by this time, you have not moved out, then they will file a court action called an Unlawful Detainer. It is your responsibility to answer this. Once it is ruled upon, the “lender” will be given a court order to have the right to kick you and your family out of the house.

What most people don’t understand is, there are options available to defend your home. You see, under the Federal Rules of Civil Procedure Rule 17 “an action must be taken in the name of a real party of interest”, your “lender” is not a real party of interest. They are just a servicer. They don’t own the note and are therefore not a lender at all.

In the next section, we will go into some foreclosure process defense strategies.

Foreclosure Process Prevention Strategies

There are a number of different things you can do to prevent foreclosure and the loss of your home. Obviously, losing one’s home is a source of anguish and pain.

The first thing you need to know about defending your home against foreclosure is that you have rights. You need to know what those rights are. If you are ignorant of your rights, then you do not have any rights.

You have the right to ask questions. You have the right to know who owns your promissory note, because only the “holder in due course” can foreclose on your home.

You see, your loan, like millions of loans around the country has been securitized. In other words, it was put into a large pool of other loans and packaged into what’s called “mortgage backed securities” and sold onto Wall St. Your bank is then paid in full for the loan and acts as a servicer for the loan.

In other words, the “lender” is not really a lender at all. They fully sold their interest in the loan. Their only responsibility is to collect money for the loan and send it to the owner of the note. The problem is, no one knows who this part really is.

As more and more homeowners learn about this issue, more and more people are learning to fight back; challenging the servicer’s rights to foreclose.

Case and point is in a recent Massachusetts Supreme Court ruling, a homeowner won against US Bank because it was ruled that US Bank was not the owner of the note and therefore did not have the right to foreclose on the homeowners.

To learn more about how to defend your home from foreclosure, then come to our foreclosure defense website for a free ebook.