Defend a foreclosure in a non judicial state

Hello, Lance Denha esq. here to discuss a 12 step program to defend against a foreclosure in a non-judicial state, as well as a judicial states. In a non-judicial foreclosure state, the foreclosure process typically does not involve the court system, and the lender can foreclose on a property without filing a lawsuit. The lender will not go to court at the start of the process but will pursue a foreclosure with the assistance of a foreclosure trustee. This is supposed to be a neutral third party that may be listed in the deed of trust attached to the home. The process of a non-judicial foreclosure varies more widely from state to state than the process of a judicial foreclosure. If you have a defense to a non-judicial foreclosure, you will need to file a lawsuit in court to raise the defense. By contrast, you would respond to the pre-existing lawsuit if you have a defense to a judicial foreclosure. However, that doesn’t mean you’re without options to challenge foreclosure. Whenever you are defending a foreclosure action remember the following essentials to doing just that in order to provide the best opportunity for success:

  1. Set a goal. Know and understand what you want;
  2. Learn the rules of your local jurisdiction and play by them;
  3. Delay, dispute, challenge and attack the debt;
  4. Research your options and find a legal professional that “Get’s it”;
  5. Obtain a Title Report; Use this as your base as to the identity of the only known lender;
  6. Keep the burden on them to show that the lender is someone else;
  7. Get an expert report supporting title, TILA, Fraud, Appraisal and other claims;
  8. Ignore their statements and intimidation;
  9. Challenge any offer the same as you would challenge an action for enforcement of the note or mortgage;
  10. Use your debt validation letter and qualified written request as the basis for an emergency injunction commanding them to answer or allowing you to file a satisfaction of your mortgage.
  11. Make them prove everything. Assume the documents are fabricated, forged or being misused or misrepresented as to how they came into the possession of the person signing an affidavit or offering testimony in court;
  12. Keep the Court’s focus on who actually would lose money if the note was not paid and don’t assume the note was not paid. If your loan was securitized, the “lender” named at closing as payee on the note, mortgagee, or beneficiary on the deed of trust either never advanced the money or was paid in full. That is what securitization is all about.

Remember that foreclosure laws can vary between states, and the specifics of your situation will determine the best course of action. It is crucial to consult with a qualified professional who specializes in foreclosure defense to evaluate the facts of your case. Click here to submit your case information statement to our team for a free initial review.

Media Still Taking Their Queues from Wall Street


What’s the Next Step? Consult with Neil Garfield

For assistance with presenting a case for wrongful foreclosure, please call 520-405-1688, customer service, who will put you in touch with an attorney in the states of Florida, California, Ohio, and Nevada. (NOTE: Chapter 11 may be easier than you think).

Editor’s Comment: If you read the mainstream media instead of the actual complaints being filed by agencies and consumers, you get the message that it is foreclosures that are dragging the economy down because of how slow they are in judicial states. They present a compelling case consisting of half truths about diminishing property values, lower lending, overwhelming servicer capacity, resistance to modifications, and delays in the “inevitable” foreclosure caused by judicial backlog.

The message is clear — let’s get this over with and move on with our economic recovery. With consumer purchasing weakening and the threat of huge lawsuits against the banks that caused this mess, the spin is that if we just forget about the whole mess, everyone would be better off.

My message is that the foreclosure mess is the result of compounded fraud, Ponzi schemes and unethical behavior by the Wall Street banks — and that the victims of that fraud deserve restitution just like any other fraud case.

Those victims include almost every part of the economy but the focus is on investors (pension funds providing lifeblood to people on fixed incomes) and homeowners who were coerced, enticed and deceived by the values used at their loan closing certified by appraisers who under threat of coercion (never working again) gave the banks the values as instructed.

Both sides of the transactions — the investors who loaned their money and the homeowners who borrowed money were deceived and economically devastated by the same lies and false documentation created to give the appearance of a proper mortgage-backed bond, a proper mortgage and then a proper foreclosure.

None of it was true. The bets were made against those mortgages because the banks knew the loans were bad and that even if they were not bad, they had unconditional power (through the Master Servicer) to declare that the “pool” was impaired. The fact that the pool was never funded and never received any of the loans escaped the attention of most people.

Neither the investors nor the homeowners ever had a chance. And the “burden” now placed on the banks of coughing up hundreds of billions (trillions) of dollars for their fraudulent behavior is said to endanger our economy. My message is that the economy, the dollar and our standing in the world is far more endangered by letting it be known that if your fraud is big enough you will never be prosecuted. It creates an uncertainty in the marketplace where trust and reliance on such checks and balances as appraisers and rating agencies is used as a principal measure as to whether to get involved in a deal.

If the banks were using the investor (pension) money, why did the banks get the bailout and other  forms of relief totaling more than all the mortgage loans put together, whether “in default” or or completely current in payments? Why didn’t that money go to the investors and the resulting credit inure to the borrowers whose loans were improperly priced by fraudulent and deceptive means?

My message is that the economy will recover far more quickly when people recognize that the government and the judicial system requires that everyone play by the same rules. If you have a case, then prove it. That is why I keep harping on Deny and Discover as the principal strategy for foreclosure and mortgage litigation.

The facts are that most of the loans were bad — defective as to who they named as payee on a loan the borrower never received, and defective as to the principal due based upon fraudulent appraisals. The borrowers received loans from third parties in table funded loans that were not only not disclosed, they were hidden from the borrower and the source of the loan money, the investors (pension funds).

The loans that were funded were undocumented intentionally because the banks wanted a window of time within which they could claim the loans were the asset of the bank instead of the investors. The documentation enabled the banks to pretend to be the lender and therefore reap the benefits of large bets against loans that increasingly were doomed from the start. After they made their money they pitched the loans, contrary to the express terms of the Pooling and Servicing Agreement, over the fence and told the investors that THEY had lost money while the banks had made trillions of dollars.

The reason why foreclosures proceed more slowly through those states requiring a judicial process is that the banks don’t have the goods. Most of the loans were never funded by the party whose name was placed on the note and mortgage. And it is no different but easier to circumvent in the non-judicial states.

The borrowers, completely ignorant of what was done to them at closing and completely ignorant of the trillions paid on the loan liability and received by the banks assume that they owe the amount demanded by the bank — when in fact the overpayment received by the banks as agent for the investors might well be an overpayment that is due back to the borrower after the investor is paid.

The only reason things that gone so far astray is that the bank strategy is working — blame the borrower and admit to some negligence and some paperwork problems. But forgery, robo-signing, powers of attorney, false endorsements, false beneficiaries, false substitutions of trustees and false affidavits are not “paperwork problems.”

False documents would not be necessary if the loans were real secured loans in a real fair and free market. If the investors and borrowers knew what was really being done with the documents and the money, they never would have entered the deal in the first place.

These are crimes that should be prosecuted. THEN the economy will recover when restitution is given to investors and homeowners, the banks assets are written down to true market value (excluding loans they never funded or purchased).

PRACTICE TIP: Attack the lien first without regard to the outstanding obligation to avoid appearing that you are seeking a “free house.”

Don’t limit your Discovery to the Subservicer. You are only getting a small slice of the pie of the information that way. Demand the same discovery from the Master Servicer and the “Trustee” of the “trust.”

Only the Master Servicer has access to information regarding third party payments. And only the Investment Banker (the brokerage that sold the bogus mortgage bonds) can account for the bets they made using insurance and credit default swaps.

And don’t forget to ask the Trustee why the “trust” was not administered through their trust division or trust subsidiary. You might well find that that no trust account was ever created for the trust and that the “trustee” did not administer the affairs of the trust because there was nothing to administer and the trustee’s powers are claimed by Deutsch, Mellon, and U.S. Bank to actually be that of agent rather than trustee with fiduciary responsibility — when it comes time to assess damages against the losing pretender lender.

Upshot of the Foreclosure Backlog

Foreclosure Procedure: Judicial and Non Judicial Sales

Every state is different to some degree, which is why you can’t take this post to court with you and assume that you have the right legal information. Checking local laws, rules and practices is essential in any foreclosure defense, defense of eviction or making claims against the lenders, mortgage brokers and other parties before or after the sale.

Many people have asked the difference between the kinds of sales and procedures. This will give you a general idea. In my opinion the non-judicial sale is equivalent to a taking of property without due process. I believe it is against basic black letter law of the U.S. Constitution.

Judicial Foreclosures

Judicial foreclosures are processed through the courts, beginning with the lender filing a complaint and recording a notice of Lis Pendens. 

  • The complaint will state what the debt is, and why the default should allow the lender to foreclose and take the property given as security.  
  • The homeowner will be served notice of the complaint, either by mailing, direct service, or publication of the notice, and will have the opportunity to be heard before the court.  IT IS RIGHT HERE THAT YOU SHOULD FILE YOUR CLAIMS, DENIALS, AFFIRMATIVE DEFENSES ETC. A Motion to Dismiss claiming the Plaintiff has failed to plead or attach proof that it is the owner of the mortgage and note and still possesses the right to pursue foreclosure. In a fair number of cases they won’t have the documentation and the foreclosure will be dismissed because the Plaintiff “lacks standing.”
  • You should file for discovery — interrogatories, requests for admissions and requests to produce relating to the accounting for your payments, the schedule of payments received and when they were posted, and the names and addresses of people who have original documentation including the note, mortgage, assignment of the mortgage and note, sale of the loan, or other instruments showing that some third party, who is NOT party to the action, is the actual party in interest. Then you can show the court that the wrong person is before the court suing you, or at least that an indispensable party is not present. 
  • If that is the case, summary judgment will probably be denied, judgment could be entered in your favor (unlikely but possible) and/or the action will be dismissed without prejudice (which means they can get their act together and sue you again. The probability is that once dismissed, it will go to the bottom of their pile and they will pursue the “low handing fruit” which are people who don’t know the their rights or how to fight back.
  • If the court finds the debt valid, and in default, it will issue  a judgment for the total amount owed, including the costs of the foreclosure process.  
  • After the judgment has been entered, a writ will be issued by the court authorizing a sheriff’s sale.  
  • The sheriff’s sale is an auction, open to anyone, and is held in a public place, which can range from in front of the courthouse steps, to in front of the property being auctioned.   
  • Sheriff’s sales will generally require either cash to be paid at the time of sale, or a substantial deposit, with the balance paid from later that same day up to 30 days after the sale.  Check your local procedures carefully.  
  • At the end of the auction, the highest bidder will be the owner of the property, subject to the court’s confirmation of the sale.  
  • After the court has confirmed the sale, a sheriff’s deed will be prepared and delivered to the highest bidder, when that deed is recorded, the highest bidder is the owner of the property. Contesting eviction after this point is highly problematic, but you still retain rights to sue the lender for TILA, Fraud and other violations and claims. TILA is NOT generally regarded as a compulsory counterclaim and so the theory is neither is fraud. The safest route is to bring your claims when your first responses are due. 

Non-Judicial Foreclosures

Non-judicial foreclosures are processed without court intervention, which means that the notice of sale and the actual sale can take place without the lender proving to the court that it has a right to do so. The burden is shifted to YOU the borrower to bring a lawsuit agaisnt the the Lender to stop the sale. Obviously this precious piece of legislation was established through aggressive lobbying and campaign contributions to the states which allow this patently wrong procedure, which unfairly puts the burden on the least sophisticated player (you) who has the least resources to start a legal action. Where is the ACLU when you need them?

The sale takes place with the requirements for the foreclosure established by state statutes. 

  • When a loan default occurs, the homeowner will be mailed a default letter, and in many states, a Notice of Default will be recorded at approximately the same time.   The fact that, like many of our readers, you are NOT in default and that the lender has made multiple errors, committed many violations of the Truth in Lending Act (TILA) is not in issue because the state only requires the Lender to post notice. The fact that the real lender, the one who actually put up the money for the mortgage and note and who owns it now does not appear on the Notice, or that the Trustee no longer has the authority to proceed are issues that the Lender sidesteps in states that permit this awful procedure.
  • If the homeowner does not cure the default (the borrower is presumed to be in default upon the filing of the notice, which immediately screws up your credit and makes certain you cannot refinance because you already “in foreclosure”), a Notice of Sale will be mailed to the homeowner, posted in public places, recorded at the county recorder’s office, and published in area legal publications.  
  • After the legally required time period has expired, a public auction will be held, with the highest bidder becoming the owner of the property, subject to their receipt and recordation of the deed. Showing up at this sale and announcing that you are contesting the sale and the foreclosure generally will stop anyone from bidding. 
  • Auctions of non-judicial foreclosures will generally require cash, or cash equivalent either at the sale, or very shortly thereafter.

It is important to note that each non-judicial foreclosure state has different procedures.   Some do not require a Notice of Default, but start with a Notice of Sale.   Others require only the publication of the Notice of Sale to announce the sale, with no direct owner notification required.  You need to know the specific procedure for your state.

Mortgage Meltdown: Foreclosure Offense or Defense in Trustee or Non-Judicial Sales

People have to be careful in Arizona and other states that use the “Trustee” method of conducting sales of property that are allegedly in default. In fact they should be careful even without being in default. You might be at risk of receiving a claim for payment from two or more sources. each claiming standing to collect and sue.  

Careful attention must be paid to the procedures in your state as to how to contest the default and prevent the sale. Of course, Bankruptcy is one avenue, and then a challenge to the authority of the trustee by alleging that he is not receiving information, authorization or instructions from the true “‘owner” of the mortgage and note. He is also not receiving payments so he can’t verify within his own knowledge that you ARE in default. And he can’t defend your allegations that you were tricked and defrauded by the lender who used coercion and deceit to get you to think the property was worth more than it was and accordingly charged you more in points, interest, fees, costs, and other damages.  

Whether your property is in foreclosure or not, a letter should be sent, via certified mail, challenging eh right of the trustee to act as trustee, since the original parties have been changed and you have not agreed to the change, nor have you been advised of the change by being given adequate notice of the terms of the transfer of the mortgage and note from one lender to another, or from a lender to a mortgage investment aggregator, or to an investment banker or to an investor. 


Quick Facts 

–  Judicial Foreclosure Available: Yes

–  Non-Judicial Foreclosure Available: Yes

–  Primary Security Instruments: Deed of Trust, Mortgage

–  Timeline: Typically 90 days

–  Right of Redemption: None

–  Deficiency Judgments Allowed: Varies

In Arizona, lenders may foreclose on deeds of trusts or mortgages in default using either a judicial or non-judicial foreclosure process. 


Judicial Foreclosure

The judicial process of foreclosure, which involves filing a lawsuit to obtain a court order to foreclose, is used when no power of sale is present in the mortgage or deed of trust. Generally, after the court declares a foreclosure, your home will be auctioned off to the highest bidder. 


Non-Judicial Foreclosure

The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A “power of sale” clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of the their default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee. Regulations for this type of foreclosure process are outlined below in the “Power of Sale Foreclosure Guidelines”.

Power of Sale Foreclosure Guidelines

If the deed of trust or mortgage contains a power of sale clause and specifies the time, place and terms of sale, then the specified procedure must be followed. Otherwise, the non-judicial power of sale foreclosure is carried out as follows:

1. The trustee must record a notice of sale in the office of the recorder of the county where the property is located. Within five (5) days after the notice is recorded, the trustee must mail, by certified mail, a copy of the notice of sale to each of the people who are parties to the trust deed, except for himself. Additionally, the notice must appear in a newspaper in the county where the property is located once a week for four (4) consecutive weeks, with the last notice being published not less than ten (10) days prior to the date of the sale.

Optionally, if it can be done without a breach of the peace, the trustee can post the notice at least twenty (20) days prior to the date of the sale, in some conspicuous place on the property to be sold and/or he or she can post the notice at the courthouse or at a specified place at the place of business of the trustee in the county in which the property is located.

2. The trustee or the trustee’s agent must conduct the sale. The sale is for cash to the highest bidder, except that the lender can make a “credit bid,” which means to cancel out some part (or all) of the money the borrower owed the lender on the lean, instead of paying cash. A successful high bidder must pay the bid price by 5 pm of the day after the bid, other than a Saturday or legal holiday. Every bid is an irrevocable offer until the sale is completed, which happens when the bidder pays the bid price to the trustee’s satisfaction. If the high bidder fails to make the payment by 5:00 pm, the day after being notified of the option to buy, then the trustee may postpone the sale.

The trustee may postpone the sale to another time, or another place, by giving notice of the new date, time and place by public declaration at the last place and time the property was offered for sale. No other notice is required. A trustee may also, by written agreement, extend the time for a buyer to come up with the payment. 

3. Once the sale is complete, the proceeds will go to the payment of the obligations secured by the deed of trust that was foreclosed, then to junior lien holders in order of their priority. The successful bidder gets a trustee’s deed, which provides conclusive evidence that the trustee conducted the foreclosure sale property.

A note regarding Deficiency Suits: A lender may not bring a deficiency suit against a person who lost a property that is 2.5 acres or less at a foreclosure, provided the property was a single one-family or a single two-family dwelling. This is so even if the high bid at foreclosure was less that the balance due on the loan. However, in foreclosures against other types of property, a deficiency suit is allowed, but is limited to the difference between the balance owed and the fair market value of the property, and then only if the suit is brought within ninety (90) days of the power of sale foreclosure.