Preventing a Foreclosure – The Proof of Ownership Strategy

One of the worst things mortgage holders can do is ignore foreclosure notices from their lenders, as doing so moves the lender one step closer to reposing the property. Even if the property goes to foreclosure there are legal steps that can be taken to delay repossession of the property. For this reasons many persons, who have fallen behind on their mortgage payments, hire a lawyer to stop, prevent or delay the repossession of their properties.

The Free Rent Approach

With the number of new foreclosure procedures hitting new highs, the pace at which delinquent loans are being processed is slowed because of legal challenges against the lenders, government pressure on lenders to offer modifications, as well as the inability of the lenders to cope with the high number of bad mortgages.

The hardest hit mortgage holders are those who refinanced at the height of the real estate boom. With some borrowers now holding mortgages that are much higher than the value of the property, many are now paying on their own terms or choosing to live free by simply stop paying their mortgages altogether.

Consequences of Ignoring Foreclosure Notices

According to attorney Charles Gallagher in his article “Foreclosure and Florida Law…” ignoring the foreclosure notice is in essence waiving “all your rights and defenses.” This gives the lender the right to repossess the property without resistance from the mortgage holder.

However, foreclosure attorneys are quick to point out that there are legal tricks and strategies that can be used to get lenders to back off: to prevent, stop or delay foreclosure proceedings.

 

The Proof of Ownership Strategy for Preventing a Foreclosure

A strategy that many attorneys use to stall foreclosure proceedings is to ask the banks to prove that they own the property for which they are issuing foreclosure notices. The practice by banks to pool mortgages into securities and sell them off to a third party, has given mortgage holders, and their lawyers a weapon to use against them. If someone can’t prove that they own someone’s property they can’t legally evict the resident from it.

Apparently there are quite a few mortgages for which the banks will have some difficulty proving their ownership of the property. Each time a mortgage note changes hands there has to be a signing over of the ownership.

Unfortunately for the banks, in the rush to generate new loans the assignment of ownership procedure was not done properly. Now that many can’t prove that they own the notes for the mortgages, borrowers are using the opportunity to halt foreclosure proceedings on their properties by forcing the banks to prove they own the loan or at least delay the process until they can figure out who actually owns the note.

Clearing Mortgage Foreclosure Backlog

Indeed, some fortunate mortgage holders will continue to live free while their banks try to sort out who owns their property, but this situation can’t be expected to continue into perpetuity. Once the mountain of paper work has been sorted out and the back-log of foreclosure proceeding has been dealt with by the courts, those who are living free will soon find this unexpected blessing evaporating.