Reversal of Palm Beach County Foreclosure Action due to Counterclaim and Affirmative Defenses

The real estate boom is chock full of stories of borrowers alleging fraud on he part of their mortgage lender.  Indeed, there have been many substantiated cases of predatory lending during this time frame which has made the fraud argument more common.  Predatory lending is, essentially, a lender seeking out prospective borrowers with little means and giving them loans with extremely low introductory rates which will later adjust to a level the borrower could not conceivably afford. 

Such behavior was egregious and, accordingly, received considerable publicity.  The practice and other similarly deceptive behavior on the part of lenders and their agents has been commonly grouped under the category of "mortgage fraud.".

As investigations into the mishandling of foreclosures continue, a Chicago Sheriff has halted evictions. Cook County Sheriff Thomas Dart has let over 1,000 evictions pile up in his office. He has decided that his office will not evict hoemowners unless lawyers for the mortgae companies personally vouch that their actions are justified.  According to a recent Washington Post article "after reading about problems such as banks "robo-signing" foreclosure documents without verifying their accuracy, Dart asked that attorneys for mortgage companies sign something personally confirming that evictions are justified. None did. So Dart has refused to honor their requests."

Dart, whose office is responsible for physically evicting delinquent homeowners announced Oct. 19 that his deputies would "no longer be doing the banks' work for them anymore. I can't possibly be expected to evict people from their homes when the banks themselves can't say for sure everything was done properly," he explained.

"Frustrated by the banks' response to the foreclosure mess, a growing number of public officials - including chief judges, attorneys general and sheriffs from jurisdictions big and small - are pushing the boundaries of their powers to slow down foreclosures in their areas, according to the Post article.

Process server issues are more common than you think. If you or someone you know is facing foreclosure and have been improperly served, there may be cause to set aside whatever relief the lender was awarded.

As the investigation into Florida's foreclosure crisis continues, another problem in many of these cases has come to light - improper service of process. According to a recent Sun Sentinel article "some individuals appear to have violated the rules of process serving: the personal delivery of legal papers, required by law, notifying people that a foreclosure action has been filed against them."

"Recent Florida foreclosure defense cases claim property owners never received a court summons even though they still were living in their home, or that servers never took required steps to find them. Some claim the servers lied, filing false court affidavits about to whom or when they delivered the papers" according to the article.

Final rules effective April 2011 were announced by the Federal Reserve Board this week. According to the Board's press release, the new rules are intended to protect mortgage borrowers from "unfair, abusive, or deceptive lending practices that can arise from loan originator compensation practices."

Currently loan originators receive more compensation from lenders if the borrower's loan has an interest rate higher than the rate that the lender requires. Borrowers unaware of this practice may not realize that the loan originator has a monetary motivation for them to accept a higher interest rate.  "Under the final rule, however, a loan originator may not receive compensation that is based on the interest rate or other loan terms. This will prevent loan originators from increasing their own compensation by raising the consumers' loan costs, such as by increasing the interest rate or points."

The new rules also prohibit loan originators from receiving compensation from a lender or third party if they have received compensation from the borrower. This aims to prevent borrowers paying loan originators directly and also paying them indirectly through an increased interest rate.