Foreclosure Defense Lawyers Gaining Ground

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Foreclosure Defense lawyers have made some major progress in their battle against the banks this year:

1. They have uncovered the ‘robo-signing’ of affidavits which are made to verify all the documents and facts in a case.

2. Fabricated and forged documents have been uncovered by a grassroots effort by a couple of homeowners.

3. Investigations of major foreclosure law firms in Florida was begun by the Attorney General with allegations of unfair and deceptive practices.

4. Fannie Mae and Freddie Mac withdrew their business from David Stern, one of the biggest firms which began the year with 1200 employees.

5. These allegations and faulty court filings led major lenders like Fannie Mae, GMAC, JP Morgan Chase and Bank of America to halt their foreclosures in September in order to review their procedures and correct any mistakes. In November, Fannie Mae and Freddie Mac resumed foreclosure and REO sales.

6. Two major legal rulings have given homeowners a much stronger role in the courts. The first is a ruling that lenders have to produce the original note before they can foreclose on a home. The second is that the lenders must respond to defenses raised by homeowners before the judge can grant the foreclosure.

The important question now is what will be the effects of all of this? Does this mean homeowners are going to be able to keep their homes and not pay their mortgage? There is a pending class action lawsuit against major lenders which demands that the lenders return the properties to Florida homeowners who lost their properties, “due to the wrongful foreclosures”. Does this have a chance of success?

Obviously the lawyers fighting the case think so. But imagine the havoc this would create in the housing market if the properties were returned! You think that the courts will turn people out of the homes that they bought in good faith? No one would be game to buy any foreclosed property and that is a major part of the housing stock especially in Florida. Best case scenario in a win would be some sort of financial compensation.

The second consequence, and a much more real effect is that the courts are going to be even more clogged up with foreclosure cases than before. More homeowners may try foreclosure defense instead of a short sale. And, if every defense has to be answered by the lender, there are going to be few summary judgments. It has already been predicted that there will be a surge of foreclosure cases in 2011. It is going to take even longer for the housing market to stabilize. Instead of all the foreclosures being cleared by 2014, maybe it will take even longer.

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