New York Foreclosure Defense Lawyers: Legal Strategies For Long-Term Success

Foreclosure can be one of the most intimidating and overwhelming lawsuits that people find themselves facing. Legal assistance is often needed to successfully navigate the process. Fadullon Dizon Krul LLP, has offices in Jericho and Woodside, and its real estate lawyers help clients in the Bronx and throughout New York defend against foreclosure lawsuits. If you need a Queens foreclosure defense attorney, they can help.

Judicial Foreclosure In The State Of New York

The events of the last several years have been harsh for many, resulting in several reasons that payments on a mortgage might be behind. In order for a bank or lender to initiate foreclosure in New York, state law requires judicial foreclosure. In other words, when a homeowner or business has stopped making payments on a loan, the lender or bank has to go to court before it can foreclose on and seize the home or property.

Crafting A Successful Foreclosure Defense In New York

Because the bank has to go to court in order to go forward with a mortgage foreclosure, the homeowner borrower has the opportunity and right to contest the foreclosure. In addition, the actions of mortgage and lending institutions are highly regulated by state and federal laws. The first step to preparing a successful foreclosure defense is examining several important documents to identify any possible errors or mistakes, including:

• An error in crediting your mortgage payments
• Unlawful or excessive fees
• An error in reporting the amount owed on the mortgage
• A failure to provide proper notice if the lender transferred your mortgage
• A mistake in filing or serving the action to foreclose on your mortgage

In addition, if you are a member of the armed services on active military duty, you may have special protections against mortgage foreclosure.

What Are Common Defenses To Residential Property Foreclosure?

Homeowners facing foreclosure in New York can work with a foreclosure defense lawyers to challenge foreclosure proceedings, potentially saving their home or delaying the process to provide more time to explore alternatives. Below are examples of defenses Fadullon Dizon Krul LLP uses to combat foreclosure. They tailor their approach to fit the situation, offering a potential lifeline to those facing foreclosure:

Lack Of Standing

Lack of standing is a powerful foreclosure defense in New York. This means the party bringing the foreclosure lawsuit has no legal right to enforce the mortgage debt. This arises when the lender cannot prove it owns the note or mortgage or when there are irregularities in the paperwork transferring ownership.

In New York, standing is not presumed. The foreclosing party must affirmatively demonstrate its standing when the case was filed. To prove standing, lenders are usually required to provide clear documentation, such as:

• The original promissory note signed by the borrower.
• The mortgage document establishing the lien on the property.
• Assignments of the mortgage, showing an unbroken chain of transfers if the loan was sold.

If there is a gap or irregularity in the chain of title, such as missing assignments or conflicting ownership claims, the court may find the lender lacks standing.

A skilled foreclosure defense attorney can investigate the chain of title and challenge the foreclosing party’s standing if the documentation has gaps or irregularities. This defense could halt the foreclosure process or even lead to its dismissal if the plaintiff cannot prove their right to foreclose.

Improper Service

Another strong defense is improper service. In foreclosure cases, New York law requires that the bank properly serve legal documents to the homeowner at the start of the lawsuit. Service helps ensure that borrowers receive notice and have the chance to respond before losing their property.

If this process is not followed strictly, the foreclosure case can be delayed or dismissed. Improper service may include:

• Delivering foreclosure papers to the wrong address.
• Leaving documents with someone who is not authorized to accept them.
• Failing to make reasonable efforts to locate the homeowner.

When improper service is proven, the court may require the lender to restart the foreclosure process. This can provide homeowners more time to explore alternatives, negotiate with lenders or pursue legal defenses.

This area is also closely tied to failure to provide notice, which can have serious legal consequences for lenders and businesses.

Timely and proper notice is essential to due process and helps protect the interests of both homeowners and lenders. An attorney’s guidance can help identify service errors and use them to challenge a foreclosure action.

Violations Of The Truth In Lending Act (TILA)

If the lender fails to comply with TILA, which requires them to disclose certain information to borrowers, the homeowner may be able to argue that the loan is invalid. TILA is a federal law designed to protect consumers by promoting the informed use of consumer credit. It requires lenders to provide clear and accurate disclosures about the terms and costs associated with the loan, including the annual percentage rate (APR), finance charges and total amount financed.

If a lender fails to provide these disclosures or provides inaccurate information, it may violate TILA. In some cases, TILA violations can lead to the right of rescission, allowing the borrower to cancel the loan within a specific time frame. Even if the rescission period has passed, TILA violations can still be used as a defense in foreclosure proceedings, potentially invalidating the loan or forcing the lender to correct the violations.

Predatory Lending

Homeowners who were victims of predatory lending practices, such as excessive fees or interest rates, may be able to argue that the loan is unenforceable. Predatory lending encompasses a wide range of unfair, deceptive or fraudulent practices employed by some lenders to entice borrowers into accepting unfavorable loan terms. These practices can include charging exorbitant interest rates, imposing excessive fees, pressuring borrowers to accept loans they can’t afford or deliberately misleading borrowers about the loan terms.

In some cases, predatory lenders may target vulnerable populations such as older people or those with limited financial literacy. If a homeowner can demonstrate that they were a victim of predatory lending, it may be possible to have the loan terms modified or even declared void. This defense protects individual homeowners and serves as a deterrent against unethical lending practices in the broader market.

Statute Of Limitations

In some cases, the statute of limitations may have expired, making it too late for the lender to initiate foreclosure proceedings. The statute of limitations is a legal time limit for a lender to file a foreclosure action. In New York, the statute of limitations for foreclosure is generally six years from the date of default or the date of acceleration of the loan. However, determining the exact start date of this period can be complex, especially if there have been partial payments or loan modifications.

If a homeowner can successfully argue that the statute of limitations has expired, it can result in the dismissal of the foreclosure action and potentially bar the lender from future attempts to foreclose on the property. It is also true that, in certain circumstances, the homeowner may be able to successfully argue that part of the debt allegedly owed cannot be collected due to the expiration of the statute of limitations on that portion of the debt.

Failure To Provide A Satisfaction Of Mortgage (RPAPL §1921)

After a borrower has paid off a mortgage debt in full, the mortgage becomes “satisfied” and documents “discharging” the mortgage should be prepared and recorded. In fact, under Real Property Actions and Proceedings Law §1921, the lender must issue and record a “satisfaction” within 30 days after full payment, thereby putting the world on notice that the mortgage has been paid in full and the lien has been released. However, this does not always happen like it should.

When a lender or loan servicer fails to provide the required satisfaction, problems occur.  The missing record causes confusion about whether a debt still exists, and, in some cases, it can even appear as if the borrower still owes money on a loan that has already been settled. Significantly, a violation of RPAPL §1921 can result in a title defect that prevents a homeowner from being able to sell their property through no fault of their own, and it is not uncommon for deals to stall or fall through on account of missing mortgage satisfactions because buyers want to ensure they are buy good title to property.

Where a lender or servicer refuses to provide the required satisfaction, RPAPL § 1921 provides a mechanism to obtain the satisfaction of a mortgage through litigation. Moreover, a violation of RPAPL §1921 can make the lender responsible for damages, as the law allows penalties, attorney fees and court costs when a satisfaction is not provided on time.

This is not a DIY matter. Proving a willful or unreasonable refusal to record a satisfaction requires exact dates, authenticated payment ledgers, a review of the recorded instrument and targeted court filings. Address a missing satisfaction of mortgage without delay to prevent a cloud on title to your property from blindsiding you at an inopportune time. The firm’s attorneys carefully examine every detail and help you create a game plan to ensure your property rights are protected.

The Lender’s Or Loan Servicer’s Failure To Comply With The Terms Of The Loan Documents

Homeowners who believe that the lender has breached the terms of the loan contract may be able to argue that the foreclosure is invalid. This defense involves carefully examining the mortgage agreement and the lender’s actions to identify any violations of the contract terms. Common breaches or violations by lenders can include failing to appropriately credit payments, charging unauthorized fees or not following agreed-upon procedures for handling defaults or modifications.

For example, if the loan agreement specifies specific steps the lender must take before initiating foreclosure (such as providing notice of default and an opportunity to cure) and the lender fails to follow these steps, it could require dismissal of the foreclosure lawsuit against you. Similarly, if the lender agreed to a loan modification but proceeded with foreclosure without honoring the modified terms, this could also be considered a breach. Successfully proving a breach of contract by the lender can potentially stop the foreclosure process or provide grounds for litigation against the lender.

Settlement Or Modification

In some cases, homeowners can negotiate a settlement or loan modification with the lender, avoiding foreclosure altogether. While not strictly a legal defense, this approach can effectively resolve a foreclosure situation. Loan modifications can take various forms such as reducing the interest rate, extending the loan term or forgiving a portion of the principal.

Settlements might involve agreements, including a short payoff of the debt and cancelation of some of the debt, a short sale, or a deed in place of foreclosure. The key to successful negotiations often lies in demonstrating to the lender that a modification or settlement is in their best interest financially. It involves showing that the costs of foreclosure and potential property management exceed the losses from modifying the loan. Homeowners pursuing this option should be prepared to provide detailed financial information. They may benefit from the assistance of a foreclosure defense attorney who can help navigate the negotiation process and ensure that any agreement reached is fair and legally binding.

Fadullon Dizon Krul LLP applies these and other strategies when challenging foreclosure. Homeowners in Manhattan, Brooklyn, Queens, the Bronx, and Staten Island, as well as Nassau and Suffolk Counties, can count on the firm’s foreclosure defense lawyers to mount an effective defense. Contact us today.

Think-Tank Solutions For Complicated NYC Foreclosure Actions

The real estate attorneys at Fadullon Dizon Krul LLP, have created a think-tank environment and offer their clients multiple strategies and multifaceted legal solutions. By taking a holistic approach to every case, their foreclosure defense and commercial conflict or litigation strategies go above and beyond solving the immediate issues to also generate long-term solutions. In other words, if you are facing mortgage foreclosure, the firm’s attorneys will not only work to help you defend this action, but also try to keep it from happening again.

Call Today For A Free Consultation

The attorneys at Fadullon Dizon Krul LLP, regularly help clients who are facing mortgage foreclosure, and if you are in the same situation, they want to help you too. They offer free consultations so they can better explain how they can help you with your particular case. Call 347-967-4087 today or reach out using the online form to schedule your free appointment today.