If you receive notice of foreclosure, or you suspect that you may receive such a notice in the near future, try not to panic. Although the prospect of foreclosure is among the most unpleasant things, you need to keep calm so that you can make the best effort to improve the situation. In the past, we’ve discussed some of the key things that people should keep in mind when they’re facing foreclosure. In this post, we will build on our previous post by discussing the possible defenses which can be raised to defeat a foreclosure action here in Florida.

Foreclosure is a Judicial Process in Florida

One essential piece of information which all Floridians should know is that home foreclosure is a judicial process here in this state. What this means is that the note holder is obligated to file a formal “foreclosure complaint” with the court prior to actually initiating the steps which lead to a foreclosure auction. The foreclosure complaint gives the borrower an opportunity to file defenses to the action and be heard. This is something which distinguishes Florida from other states which allow foreclosure actions to proceed in a non-judicial manner. Those facing foreclosure need to be aware of this judicial restraint on lenders; if a lender proceeds in a non-judicial manner, this can provide a viable defense for the borrower.

The Three Defenses: Lack of Standing, Insufficient Notice & Unclean Hands

When it comes to defending against a foreclosure action, there are really three primary defenses which can be raised: (1) lack of standing, (2) failure to give adequate notice, and (3) unclean hands. Lack of standing is the legalistic way of saying that a particular plaintiff doesn’t have the ability to actually bring a lawsuit against the defendant. Let’s consider a simple example: if you execute a contract with another person, and the other person breaches, an outside third party normally doesn’t have the ability to bring a suit against the other party for breach of contract. You, as the person who entered the contract, can sue for damages which follow from the breach, but another, unrelated party cannot. In this situation, the unrelated party would “lack standing,” meaning he or she wouldn’t be able to initiate a viable lawsuit. In a foreclosure context, one way to allege lack of standing is to say that the plaintiff isn’t the entity or person who holds the note or lien on the property. The plaintiff and the note holder need to be one and the same, or the note holder must transfer its interest to the plaintiff in some fashion. Another common defense is failure to give adequate notice of the default. When someone falls behind on his or her mortgage, and enters default, the lender is typically required to give notice to the borrower prior to initiating foreclosure. This notice is intended to give the borrower a chance to rectify the situation. The notice requirements are usually contained in the original note or the loan modification documents. If the lender doesn’t give the required notice, this may be viable grounds for defeating the action. Another potential defense is “unclean hands.” Unclean hands basically refers to morally outrageous, unscrupulous, or otherwise egregious conduct on the part of the lender. Florida courts have ruled that unclean hands can overturn and otherwise valid foreclosure action. In other words, if the lender’s claim has merit – so, the borrower did in fact default under the terms of the loan – that claim can still fail if the court finds unclean hands. Unclean hands can take any number of specific forms. One form would be altering a borrower’s credentials in order to have the borrower qualify for the loan, without the borrower’s knowledge, and then raising the borrower’s payment. This scenario actually unfolded here in Florida, and the court ruled against the plaintiff under the doctrine of unclean hands.

Contact Financial Freedom Advocates for More Information

To learn more, contact Financial Freedom Advocates today by calling 786-668-6688.