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Understanding Foreclosure Lawsuits and Why You Need To File an Answer

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Your rights and responsibilities in contesting a foreclosure will vary depending on whether you are subject to a judicial or nonjudicial one. If you face a judicial foreclosure, it is crucial to file an answer. This article will help you understand foreclosures and why you should always file an answer.

Written by Todd Carney, J.D. Harvard Law 2021.  
Updated November 26, 2021


Lawsuits and home loans can both be complex subjects on their own. When you combine them together into a foreclosure lawsuit, they can get even more complicated. Judicial foreclosures are enacted through a state court system. To foreclose on property, lenders need to file a lawsuit against the property owner. Foreclosures can be stressful and difficult to navigate even at the best of times, but understanding some key aspects of foreclosure lawsuits can be extremely useful. One of the most important things you can do when facing a judicial foreclosure is to file an answer.

If you fail to file an answer, then you could face a default judgment where the bank will be given the right to file a mortgage foreclosure on your real estate. Filing an answer will allow you to put forth any defenses or counterclaims you have and also ensure that you are kept informed about the lawsuit.  

This article will help you understand foreclosures and why you should always file an answer.

What Is a Foreclosure?

When most people buy a home, they use a mortgage loan to cover the high price of the house. With a mortgage, the property owner will have possession of the land, but the mortgage company that provided them the loan will have a legal right to take the home if the property owner does not pay back their loans. The method to take the property is a foreclosure.

Steps of a Foreclosure

While the process of a foreclosure action will vary based on state law, there are some basic components of the process that are the same in every state. The process starts when the homeowner falls behind on their mortgage payment. After the first missed payment, the bank reminds the property owner that they missed a payment.

The next step comes when the borrower fails to make a second payment. At this point, the mortgage lender sends a demand letter that tells the homeowner that they are risking default. This letter also discusses the impact of being in default and provides the property owner with potential actions to take in regard to the mortgage.

If the homeowner still fails to make mortgage payments, then the process goes into the reinstatement period. At this point, the bank provides a notification that indicates default. The notice must either be provided by mail or posted on the property. Some states do allow 90 more days for the borrower to pay back all of the payments they are behind on.

If the loan fails to be reinstated, the next step will be to have a trustee record that there is a notice of default at whichever county clerk’s office has jurisdiction over the property. The lender will then give notice that they are going to sell the home. After this, the public notice will be published in the newspaper, posted on the home, and mailed to the homeowner.

The fifth step in the process is a foreclosure sale. This sale is typically conducted through a public auction where the highest bidder will usually receive the property. The new owner sometimes has the right to immediately take the property after the foreclosure sale, but the initial homeowner will often have a “right of redemption” to allow them to buy back the property. In order to do this, the property owner needs to pay back the missed mortgages along with any costs from factors such as interest rates or penalties.

Eviction is the final step. The original owners will have a specified amount of time to move out, and if they fail to move out within that time, then the sheriff may come and force them out.

Types of Foreclosures

There are two different types of foreclosures. The first is a judicial foreclosure. Judicial foreclosures require the mortgage servicer to file a lawsuit and get a court judgment before it can take the property. The requirement of a court order can drag out the process for years because the homeowner may actively contest the lawsuit in the court system.

Another type of foreclosure is a nonjudicial foreclosure. This proceeding requires the lender to give the typical notices and adhere to a waiting period for a property owner to default on a mortgage, but the financial institution does not need a court order. Mortgage companies prefer nonjudicial foreclosures since they move quicker than judicial ones. However, even a nonjudicial foreclosure often will be subject to some kind of judicial oversight.

A Foreclosure Lawsuit

If you default on a mortgage, then the lender has the right to start a foreclosure action. If this process is successfully carried out, the financial institution will take control of the property. You usually have about 20 to 30 days to provide an answer to the initial foreclosure complaint.

Complaint vs. Summons vs. Lis Pendens

There are three documents that the financial institution must prepare to start a foreclosure. They are a complaint, a summons and a notice of lis pendens.

A complaint is a “petition,” where the lender will state their claims. The foreclosure complaint will detail the relevant loan documents, such as a promissory note, the property that is subject to the foreclosure, how the borrower defaulted, the total amount of money that the property owner needs to pay and any other relevant defendants in the lawsuit.

A summons explains that the lender has filed a foreclosure. The summons must tell the defendant their rights and provide the lendee a specified amount of time to reply to the foreclosure action. The complaint and summons are typically served together and the time period that you have to submit your reply starts as soon as you receive them. Remember, you will usually only have 20 to 30 days, so it is important to start coming up with an answer as soon as you receive them.

Finally, a notice of lis pendens is a record of the pending lawsuit in the county’s relevant record center. The point of this document is to provide notice to the public, and any future lien holders or purchasers, about the pending lawsuit on the home. This document is usually only a page or two. It just describes the property and indicates that a foreclosure case has begun.

Why You Should File an Answer to a Foreclosure Lawsuit

Filing an answer to a foreclosure action only concerns judicial foreclosures. With nonjudicial ones, borrowers are not going to be served with a complaint, so they will not have anything to file an answer to. As a result, there is no risk of a default judgment.

If you face a foreclosure, then it is crucial for you to file an answer. If you fail to file an answer you could be subject to a default judgment, where the lender takes control of your property without you having the opportunity to present any kind of defense. Filing an answer provides you an opportunity to contest the foreclosure and gives you more time to figure out a way to best engage in loss mitigation.

Once you provide an answer, you will also have the legal right to be kept up to date of all of the actions concerning the foreclosure case against you.

What if You Don't Answer a Foreclosure Lawsuit?

The failure to respond to a lawsuit can prove costly. If you don’t file an answer, you’re almost certain to lose the foreclosure case because the lender will continue to pursue the foreclosure and no one will oppose them. In all likelihood, the mortgage company will ultimately receive a default judgment from the court, which will give the lender control of your property.

Additionally, failing to answer the lawsuit will forfeit your legal right to be kept up to date about how the foreclosure is proceeding.

Wrongful Foreclosure

A wrongful foreclosure is when the foreclosure proceedings are pursued incorrectly. The error can be intentional or accidental. Some situations that could lead to a wrongful foreclosure include: 

  • If there was an error with processing the mortgage payments that resulted in the default; 

  • If the lender did not give the borrower the required notice; 

  • If there was a miscommunication between the lender and the borrower; 

  • If something was calculated incorrectly; 

  • If a relevant party engaged in scams or fraud; and 

  • If the agreement had a loan modification that was not clear.

When someone is facing a wrongful foreclosure, they should contest it. Given that a wrongful foreclosure occurs because the lender did not adhere to the legal requirements, it is important for borrowers to know what those requirements are so they can protect their legal rights. 

You can search through articles like this one and general legal sources to familiarize yourself. Ultimately, though, if you are not familiar with how to file a wrongful foreclosure suit, then it is worth looking for legal aid from a foreclosure attorney. Since this action concerns your property, it’s important to not take chances. A foreclosure attorney can provide you with the legal services and expertise you need.

Let's Summarize…

Your rights and responsibilities in contesting a foreclosure will vary depending on whether you are subject to a judicial or nonjudicial one. If you face a judicial foreclosure, it is crucial to file an answer. If you face a wrongful foreclosure, you should make sure you know of your legal rights and how the lender violated the requirements of the foreclosure process.



Written By:

Todd Carney, J.D. Harvard Law 2021

LinkedIn

Todd Carney is a writer and graduate of Harvard Law School. While in law school, Todd worked in a clinic that helped pro-bono clients file for bankruptcy. Todd also studied several aspects of how the law impacts consumers. Todd has written over 40 articles for sites such as RealC... read more about Todd Carney, J.D. Harvard Law 2021

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