How hard it is to challenge a foreclosure depends greatly on what type of foreclosure you're facing: judicial or nonjudicial. It's easier and less expensive to jump into the existing lawsuit with a judicial foreclosure than it is to challenge a nonjudicial foreclosure. If your foreclosure is nonjudicial, which means it proceeds outside of the court system, you'll have to file a lawsuit to challenge the process.
While every foreclosure case is unique and different states have their own procedures, here's a summary of how you might go about challenging each type of foreclosure, with more details on the procedures below.
In a judicial foreclosure, the foreclosing party (the "lender") must file a lawsuit to get the foreclosure started. You'll be notified of the foreclosure case when papers called a summons and complaint (or petition) are delivered to (served on) you. The documents will advise you of the lawsuit and give you a limited amount of time to respond if you choose to contest it. And, significantly, the lender will have the burden of proving to the judge that the foreclosure is justified under the terms of the mortgage.
The proof will typically consist of the documents you signed when taking out or refinancing your loan, like a mortgage (or deed of trust) and a promissory note. The paperwork might also include copies of notices the servicer sent to you, signed agreements, assignments and endorsements, internal accountings of payments both made and missed, and written statements under oath—called declarations or, if sworn before a notary public, affidavits—from employees of the lender or servicer who claim to have knowledge of how many payments you missed and the lender's compliance with your state's laws regarding foreclosure procedures.
As a general rule, if you don't point out errors or omissions in the paperwork or procedures, the court will accept them as sufficient evidence, award the lender a default judgment, and order a foreclosure sale.
If you decide to respond to the suit, you'll have the opportunity to tell a judge why you think the foreclosure isn't warranted. You have to present your objections to the foreclosure by filing an "answer" with the court by a specific deadline. The deadline is usually between 20 and 30 days after service, though it varies. Check the summons you received along with the complaint to find out how much time you have to file an answer in your case. You must prepare your answer in the proper format, including responses to each of the claims made by the lender and any defenses you might have. For each numbered paragraph in the complaint, you should admit, deny, or say you don't have sufficient information to admit or deny (and so you deny) the allegations contained in that particular paragraph.
You may also ask that the lender prove its claims, like how many payments it says you've missed and the fees it claims you owe. Be aware that if you admit an allegation, the lender doesn't have to prove it. You'll also need to raise any defenses and affirmative defenses in your answer, such as the lender doesn't have the right to foreclose (called "standing"), as well as any counterclaims, like the servicer violated federal mortgage servicing laws, if applicable.
The lender might then file a summary judgment motion, asking the judge to decide the case without a trial. You get the right to oppose the motion by submitting your arguments and evidence in a response to the motion. You need to serve your response to the other parties, and the court may then hold a hearing. If the court determines that you don't have evidence supporting a defense, the lender will win the motion, get a judgment of foreclosure, and be able to go forward with a foreclosure sale. If the judge denies the lender's motion, the court will allow the case to proceed to trial.
Before the trial, "discovery" will take place. This process is when you and the lender ask each other for facts, documents, and other information before the trial. In a foreclosure, each side may ask the other to provide certain information (through a demand for production of documents, interrogatories, and depositions) that might help prove or disprove the right to foreclose.
Borrowers sometimes make discovery demands in their answer or when opposing a motion for summary judgment on the basis that discovery is necessary to expose specific facts about the case or facts that the lender claims are true. But you'll have to show that discovery might lead to relevant evidence or that the facts you need to justify your opposition to the foreclosure are exclusively within the lender's knowledge and control. Otherwise, the court might go ahead and grant summary judgment.
At the trial, the lender must try to prove it has the right to foreclose. Then, you must show that the lender shouldn't be permitted to foreclose. You'll both present your cases, sometimes through witnesses who can be questioned by the judge and cross-examined by the other side. For example, if you and the lender disagree about how many payments you've missed, both you and a representative who works for the loan servicer would testify, and the judge would decide which of you is most likely telling the truth.
At the end of the trial, the judge will either:
Because nonjudicial foreclosures proceed outside of court, you'll have to file a suit in court to get a judge to review the matter. And you'll have the burden of proof because you want the judge to stop a proceeding—the foreclosure—that's already authorized by the mortgage contract. You'll need to include a motion for a temporary restraining order (TRO) and preliminary injunction to enjoin (stop) a foreclosure sale while your claims are being litigated. Usually, homeowners also ask the court for a permanent injunction.
In your application for a TRO, you'll have to show the judge that you'll suffer "irreparable injury" if the foreclosure happens. Courts often agree that losing your property to foreclosure causes irreparable harm.
Courts sometimes grant TROs without a formal notice or hearing, so the lender might not have much time to respond. If the lender doesn't respond to your motion, the judge will probably grant the TRO. Though, you might have to post a bond to protect the lender from economic harm if you eventually lose the case. A bond could be expensive, but you might, in some circumstances, get the bond requirement waived, like if you don't have much income or if the court decides that the lender's interest is adequately protected. Some courts have said that bonds aren't required in foreclosures, especially in cases where the property value exceeds the amount the borrower owes, because the lender has a secured interest in the property and can eventually foreclose if the borrower loses the case. Or, you could suggest paying the bond by making payments, such as at your regular monthly mortgage payment amount or in an amount that would offset any expense the lender might incur during the process, or in a minimal (de minimus) amount.
A temporary restraining order usually lasts until a court hearing in which you'll try to get a preliminary injunction stopping the foreclosure pending a full trial.
At the preliminary injunction hearing, the court will review each party's documents. (The documents are usually the same type of paperwork that's used in judicial foreclosures.) You'll have to prove your case, like by showing that the lender didn't follow state or federal foreclosure laws or the terms of the deed of trust. You'll have to convince the judge at this preliminary injunction stage that the foreclosure should be put on hold until you can produce your full case at trial. You might use declarations or affidavits from you and other witnesses to establish the facts you believe should stop the foreclosure.
At this hearing, the court must look at whether:
If the judge decides for the lender, the TRO will end, and the court will deny your motion for a preliminary injunction. While you can still proceed with your lawsuit, the foreclosure will likely go ahead because an injunction isn't in place to prevent it. While it's a long shot, you might be able to ask a higher court to overrule the denial.
But if you're able to convince the judge to halt the foreclosure until you can present your full case at trial, the judge will issue a preliminary injunction. The lender might then try to settle with you, give up on the current foreclosure and start over, or meet any conditions the court sets and then ask the court to lift the injunction. Otherwise, you'll go to trial. The preliminary injunction enjoins the foreclosure pending the trial.
If it's clear that the lender failed to follow the law and, as a result, you were deprived of an important right, it might be worth it to fight the foreclosure in court. After all, if you could get the foreclosure dismissed or significantly delayed, you might be able to stay in your house much longer than you would otherwise. Or you might gain leverage that could help you in working out a way to keep it.
You might have a decent shot at stopping or at least delaying a foreclosure if you have a strong defense, for example:
Sometimes, though, filing an answer in a judicial foreclosure or starting a suit to fight a nonjudicial foreclosure isn't the best option. Say you're facing a judicial foreclosure and you have an argument that requires you to file another type of pleading to preserve your rights. Filing an incorrect response might cause you to lose an important right. For instance, if the lender made an error, like failing to serve you with the foreclosure lawsuit properly, you can dispute the court's jurisdiction by filing a motion to dismiss. If you win, the foreclosure has to start over. But if you file an answer, you likely stipulate (agree) that the court has the right to hear the case, and the foreclosure goes ahead. Litigation is complicated, and most people fare better after getting help from an attorney.
You'll most likely need to hire an attorney to be successful in fighting a judicial or nonjudicial foreclosure. Any given foreclosure or legal situation has many potential claims and defenses, so it's a good idea to seek the advice of a local lawyer or a legal aid organization to explore all possible options that might be available in your particular situation. Unless the lawyer thinks you have a very good case, you might want to look into alternatives, like trying to get a loan modification or giving up your home through a short sale or deed in lieu of foreclosure.
If you want to learn about possible ways to avoid a foreclosure—like with a loan modification, short sale, or deed in lieu of foreclosure—consider also talking to a HUD-approved housing counselor.