“How do I stop my foreclosure?” This is one of the most common questions I get asked. Nevermind the news headlines about robosigners, nevermind the legal jargon and Wall Street gibberish–homeowners usually have one primary question: how do I keep the bank from foreclosing on my house. It’s a difficult yet fair question, and it cuts to the heart of what I do as a Texas foreclosure defense attorney (and what my colleague, Charles Parson, does as a Utah foreclosure defense attorney).
I will tell you what I do to stop foreclosures in Texas, which is a “non-judicial” foreclosure state. In non-judicial states, banks generally do not need a court order to foreclosure on a property. All that is required is the filing of a few documents with the local county clerk and sending notice to the homeowner.
Well, I will tell you what I do to stop a foreclosure in Texas in a moment. First, I will explain the context of a foreclosure.
A “foreclosure” is the sale of a property. State laws dictate the method and manner in which foreclosures are to be done. In Texas, foreclosure sales take place on the first Tuesday of the month on the courthouse steps (this is something that will vary from state to state). A foreclosure sale is exactly that–a sale. It does not mean the sheriff or constable is going to kick you out of your house. While it certainly can be a scary process, you will sleep in your own bed in your home the day after a foreclosure sale. Removing you from your home, which most people think of in terms of having the sheriff put your furniture out on the street, takes a separate judicial purpose, known in Texas as a “forcible entry and detainer” action. It’s basically a separate lawsuit, and you should have plenty of notice about it. Being foreclosed upon does not mean you are instantly kicked out of your house.
Many people have the misconception that simply hiring a lawyer will automatically get their foreclosure stopped. I wish I had that magic wand. The reality is that hiring a competent foreclosure defense lawyer probably gives you the best shot at stopping a foreclosure, but there are unfortunately no guarantees. In a non-judicial state like Texas, the laws are set up where the bank can foreclose unless they voluntarily pull the foreclosure sale (which are frequently called a trustee’s sale or substitute trustee’s sale) or a court orders that the foreclosure be stopped. This is where I come in as a foreclosure defense attorney.
I always first try to negotiate with the bank and the trustee who is conducting the foreclosure sale (in Texas, Chase, Wells Fargo, U.S. Bank, PNC, and Citi usually use outside law firms to serve as substitute trustees and conduct the foreclosures; “Recontrust” usually conducts Bank of America foreclosures, particularly since BAC Home Loans was absorbed back into BoA). To gain as much leverage as possible, I look at several things. First and foremost, I look to see if the technical notice and filing requirements were followed. They usually are, so I then look at the substantive issues.
The first substantive issue I look at when I fight a foreclosure is the chain of title. Most counties are pretty good about putting their property records online, so there is usually quite a bit to examine for irregularities. Do the dates match up? Was the note and deed of trust assigned by a defunct entity, such as IndyMac Bank, F.S.B.? At this point, I am looking for errors that appear on the face of documents.
If there are no glaring defects in the chain of title for the note and deed of trust, I then look at securitization issues. Who noticed the foreclosure? In many instances, an asset-backed trust will claim to be the current mortgagee and be the party ordering foreclosure. Was an asset-backed trust in the chain of title? If the answer to either of those questions is a ‘yes,’ then I look up the securitization trust’s public filings with the U.S. Securities and Exchange Commission. The SEC has a very good search tool called EDGAR that allows you to search their records. Among other documents, I read the trust’s “pooling and servicing agreement” and its prospectus. Both are pretty long, pretty dry documents, but they are important in fighting a foreclosure.
All of this investigation is geared towards giving me leverage in negotiating with the bank or their lawyers.
If the foreclosure cannot be stopped agreeably, the next step I take (in appropriate cases) is filing a lawsuit and application for a temporary restraining order. Here, I am literally seeking an order from the court that immediately stops the foreclosure dead in its tracks. Temporary restraining orders are, as their name implies, temporary. In Texas, they last 14 or 28 days. To make them longer-lasting, I ask the court to convert a TRO into a temporary injunction (which lasts the life of the lawsuit).
A TRO is not automatic. They are up to the sole discretion of the judge, as is the longer-lasting temporary injunction. This is why I usually first attempt an amicable resolution–because the homeowner’s fate is not in the hands of the judge at that point. If a judge will not grant a TRO and the bank will not voluntarily suspend the foreclosure proceeding, the reality at that point is that there is very little that can be done to stop the sale. That does not mean the lawsuit is over, and it does not necessarily mean an eviction is imminent. I have had some very effective negotiations post-foreclosure. However, it does put the homeowner in a more difficult position because, at least in Texas, the law is stacked against the homeowner.
Of course, there are many more details to stopping a foreclosure, but this is an overview of part of the process that I go through on behalf of homeowners. As I’ve preached before, it is critically important to be proactive. Don’t sit back and simply wait (and hope) for your foreclosure to get pulled or for documents to magically fall into your lap, because it won’t without some work. There are no shortcuts, and what may have happened to some homeowner in a different state 1,000 miles away has nothing to do with your house–and judges know this. To quote the Oakland A’s general manager, “Hope is not a strategy.” You or your lawyer has to do the homework and do the dull reading. It is what will give you an advantage and create the best chance to stop the bank from foreclosing on your house.