Lenders make mistakes, too. Foreclosures put your most valuable investment at risk, and there are times when a foreclosure is warranted. If a borrower fails to make payment, the lender has a right to recuperate their investment in you by foreclosing on your property.
Examples of foreclosure errors can be seen with Bank of America.
The lender was required to pay $46 million in California. The homeowners underwent a years-long foreclosure. Bank of America took the couple’s home away instead of filing a loan modification, and they sold the house. The couple eventually were given their home back six months later only to find out that all of their belongings were gone.
Furniture, appliances – everything was gone.
They also came home to a $20,000 bill from the Home Owner’s Association because of substandard landscaping. The bank also charged the couple $35,000 in unpaid interest despite foreclosing on the home wrongfully.
The wife was an Olympic ice skater, almost died from the stress. She started cutting herself to deal with the stress that she was under. Her husband attempted suicide. The $46 million will go primarily to public law schools and organizations that will help fight back against future wrongful foreclosures.
Causes of a Wrongful Foreclosure Action
Lenders, which often sell the loan to other parties, may initiate a foreclosure action against a home for many reasons. But the following are the most common reasons why a foreclosure may be made wrongfully:
- Misapplied payments
- Breach of contract
- Servicer did not adhere to a forbearance agreement
- Incorrect tax impounds
- Interest rate adjustments not adequately applied
Borrowers that are involved in a wrongful foreclosure will have a long road ahead of them. Lenders are not known to react nicely when they make a mistake, and it’s not uncommon for the bank to try and push the blame on to the borrower.
Borrowers can seek damages for:
- Emotional distress
- Property
- Punitive
If found guilty, the lender or servicer will need to cancel the foreclosure sale. The borrower’s legal bills will also need to be paid.
How Borrowers Can Protect Themselves
Borrowers can protect themselves from foreclosure to some extent. One of the best methods is to:
- Keep records: Keep all records of payments and interactions with the lender. This will help add to the borrower’s defense. Solid recordkeeping allows the borrower to protect their investment.
- Review communications: Communications with lenders should be reviewed in its entirety and documented, too.
Communicate with the lender when any issues arise. Escalate the matter and try and get it sorted out as quickly as possible. If small discrepancies are not caught and corrected promptly, they can lead to the wrongful foreclosure action.
If the foreclosure process does start, it’s important to contact an attorney. The National Association of Consumer Advocates is a great resource to find a lawyer that will help you fight your foreclosure.
Requesting the right documents, required by law, may be all that’s needed to win the case and reverse the foreclosure. An attorney is always the right choice during a wrongful foreclosure because the lender will be responsible for the homeowner’s legal fees if they’re found guilty.
