How to Defend - Answer a Foreclosure Lawsuit in Court


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Defined.   A lawsuit is a legal action filed by a party seeking to enforce his or her legal rights. A foreclosure action is one whereby a lender seeks to enforce its legal rights by foreclosing on the mortgage note, taking the property, selling the property, and recouping the money the owed under the mortgage. When the amount recouped by the sale of the property is less than the amount owed on the mortgage, the lender will likely seek to require the borrower pay the difference. This difference - the amount the borrower must pay after the sale - is called a deficiency judgment. Depending on the sale price of the property, this deficiency judgment can be substantial.

The Answer. The answer to a foreclosure lawsuit is exactly what is appears to be - a borrowers answer to the allegations made in the lawsuit (sometimes called a foreclosure “action" or “claim. ") The lender is the “plaintiff" and the borrower is the “defendant" when the lender files a foreclosure lawsuit against the borrower. The answer to the foreclosure contains three sections, as described below.

What an Answer Must Contain. The answer to the foreclosure lawsuit has three major parts to it: 1) A statement admitting or denying the allegations made in the Complaint, 2) A list of defenses to the foreclosure lawsuit, and 3) A list of affirmative defenses to the foreclosure lawsuit. Sometimes there is a section called “Counter Claims" which acts like a counter-lawsuit, suing the lender for its own violations of the law. Each will be discussed below.

Most states are “notice pleading" states, which means an answer only needs to put the other side on notice of your defenses. An answer generally does not require a laundry list of facts supporting each defense, just enough information to put the other side on notice of how you intend to defend the lawsuit at trial. However, counterclaims, as discussed below, should contain each of the “elements" that establish that particular counterclaim.

Admitting or Denying Allegations Defenses. The defenses section of the Answer is the section whereby the defendant-borrower states the reasons why the lawsuit should never have been filed because the plaintiff-lender is “flatly wrong. " Each defense only needs to be a short and plain statement of the defense raised, unless fraud is one of the defenses, in which case the grounds of the fraud must be stated.   Some defenses should be raised in a Motion to Dismiss instead of by Answer, such as when the lender sues the wrong person (such as when the lender mixes up the names).

A “defense" would include a statement to the effect of “you got the wrong guy. " Formally, this would be defense entitled, “Failure to State a Claim. "   It is very important all defenses known to the borrower at the time the answer is filed are included within the Answer. Civil Rule 12(b) requires “every defense to a claim. . . must be asserted in the [Answer]. . . " Not including the defenses in the Answer can cause the borrower to waive his or her ability to raise the defenses later. If a rough Answer has already been filed in the lawsuit, the borrower may be able to file an Amended Answer.

Affirmative Defenses. Affirmative defenses are the rough equivalent of “yeah, but. . . " That is, the lender isn't flatly wrong in filing the foreclosure action, but there is some legal reason to avoid judgment in the lender's favor. For example, the lender might have sued the right person, but failed to mail a required Notice of Acceleration, which most mortgages/deeds of trusts require occur before the lender files foreclosure.   Or, the lender might be the cause of the default if it forced-placed insurance on the homeowner, causing the payments to be impossible.

Counter Claims. Counter claims are mini-lawsuits filed back at the lender. Instead of filing a separate lawsuit against the lender, you may include a section within the Answer document that alleges claims against the party suing. If you think a counter claim is applicable, you must file it in the foreclosure action, or be forever barred from bringing it.

Civil Rule 13(a) requires the Answer you file include as a counterclaim any claim that - at the time of the lawsuit's service - arises out of the transaction that is the subject matter of the opposing party's claim. In a foreclosure lawsuit, this means any claims the homeowner has against the lender due to a defect in the mortgage must be filed with the Answer. This is called a compulsory counterclaim. It means that if you lose the foreclosure lawsuit and later find out the mortgage is defective, then you most likely will barred from suing the lender for the defect.   Counter claims should include all of the elements of that particular law asserted.   For example, one of the elements in a breach of contract claim requires an actual contract exist between the parties.   If asserting breach of contract,  you would want to include an allegation that a contract exists between the parties.

Timing. It is critical that an answer be filed within the required time frame under the rules of your state. Most states require the lender say within the lawsuit paperwork (within the Complaint, or on a cover sheet) how long a borrower has to file his or her Answer to the foreclosure. Whether a date is stated or not, the Answer usually must be filed within 20-30 days from the date served. If and Answer is not filed, the lender can move for default judgment, which means the borrower doesn't disagree with the foreclosure, even though he or she was given an opportunity to do so. If it is nearing the deadline or the lender hasn't requested a default judgment yet, it is generally appropriate to file a “Motion for Extension of Time. "

Instead of filing an Answer to the foreclosure lawsuit, the borrower may file a “Motion to Dismiss, " which stops the clock running on the need to file an Answer until the Motion to Dismiss is ruled upon by the Court. If you believe a defense is present that warrants a Motion to Dismiss, this will stop the foreclosure clock until the court decides whether dismissal is warranted.

Things to Consider When Beginning a Foreclosure Defense. The most significant item to consider is the impact fighting a foreclosure will have on the amount the borrower might be obligated to pay post-foreclosure via deficiency judgment.   The amount owed at the end of the foreclosure action generally includes the amount of interest and penalties accumulated between the default date and the date of final judgment, as well as (in most states) attorney's fees.  If the borrower thinks he or she might end up in bankruptcy if the foreclosure defense fails, then these accumulating costs might be less of a concern.

Next, consider if you wish to have a jury trial or a trial in front of a judge. This designation should be made within the Answer, usually by writing “JURY TRIAL DEMANDED" under the title of the document, then add a section after any Counter Claims titled “JURY TRIAL DEMANDED" and write “Defendant hereby demands a trial by jury. " It is usually a good idea to demand a jury trial, or one judge will be making all of the decisions.

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