Foreclosure secrets that your mortgage company does not want revealed

Foreclosure secrets that your mortgage company does not want revealed

A busniessman crosses his fingers behind his back while he takes an oath

A businessman crosses his fingers behind his back while he takes an oath

Mortgage companies need for you to not understand your rights when you are facing a foreclosure because if you don’t understand your rights, you won’t stand a chance of stopping the foreclosure on your Alabama home.


If you do understand your rights, and specifically in this article the three secrets, then you greatly increase your chances of success.

Do keep in mind we go into much greater detail in our free four part video series on saving your home from a foreclosure — but this video series is only for you if you are serious and willing to work hard to save your home.

OK let’s jump into these three secrets:

  1. Often they violate RESPA’s timeline
  2. Often they violate the FDCPA
  3. You can stop a foreclosure by using RESPA

First, what is RESPA and the FDCPA?  These are federal laws.  RESPA stands for Real Estate Settlement Procedures Act and the FDCPA stands for the Fair Debt Collection Practices Act.

RESPA applies to almost all mortgage loans on your residence.

The FDCPA often applies — the basic test is whether the mortgage servicer you have now received the loan when it was current or in default.  Read your note/mortgage to find out what is a default — normally it is not paying on the exact due date.

OK with this background let’s go to secret number one . . . .

Mortgage companies often violate RESPA’s timeline on foreclosures

RESPA forbids a foreclosure until you are 120 days late on your mortgage.  We see companies starting to foreclose well before the 120 days.  So your mortgage company may advertise in the paper that you will be foreclosed before you are even 120 days late.  I sometimes see lawyers saying your mortgage company can foreclose at the 60 day mark — that is not true if RESPA applies.

If a mortgage company forecloses when it is too early to do so, this is a great opportunity to sue your mortgage company in federal court for all the damages that flow from a bogus foreclosure:

  • Economic loss of equity
  • Damage to your credit report
  • Emotional distress
  • Mental anguish
  • Loss of wages from missing time at work
  • Physical pain and suffering from watching a mortgage company wrongfully foreclose
  • Etc.

Now you know this secret, what do you do with it?

You need to move quickly to never get to the 120 day mark or if you can’t bring the payments current, then make sure you are doing a great job in applying for loss mitigation (which includes loan modifications).  By the way this is our second step in our unique five step process we go into great detail about here in our four part video series.

We’ll come back to why it is so important to apply for loss mitigation properly, especially if you cannot bring your payments current.


Mortgage companies often violate FDCPA by lying to you

This is one of the classical dirty tricks by mortgage companies.  Here are some typical examples of lies:

  • They lie about not receiving your payments
  • About the date of your payments
  • About not receiving your loss mitigation package
  • They lie about what is in (or not in) your loss mitigation package
  • About when the mortgage company received your loss mitigation package
  • They even lie about postponing/canceling a foreclosure sale

Why would your mortgage company feel like it can get away with these types of lies?

Because the law (ironically named “Statute of Frauds”) in Alabama allows them to do it, according to how they view the law.  They argue (and win amazingly) that Alabama law says it is no problem for a mortgage company to lie about anything related to your mortgage loan, as long as they don’t do it in writing.  (Even then they often argue they can lie in writing — it is amazing and disgusting).

So they view Alabama law as giving them a free pass to do whatever they want.  I disagree with this but assume it is true?

This is why we need the FDCPA when it applies.  It tells mortgage companies “You better not lie to homeowners or you can be sued.”

Mortgage companies then say “Yeah, but Alabama’s law of the statute of frauds protects us and allows us to lie” but they are forgetting that the FDCPA is federal law.

Federal law trumps Alabama law.

So we don’t care in a case under the FDCPA what Alabama statute of frauds says or doesn’t say.

Wow, the mortgage companies hate this law!

You can sue and get damages as we listed above.

Now you know this secret, what do you do with it?

Few suggestions:

  • Check and see if the FDCPA applies to your mortgage company.
  • Document all lies, big and small.
  • Get with a lawyer who knows how to use the FDCPA against mortgage companies as there is a short statute of limitations (one year from the lie) that normally applies.
  • If you can sue, then strongly consider suing in federal court as this gets the attention of the mortgage company very quickly.

You can use RESPA to stop many foreclosures

RESPA not only tells mortgage companies when they can foreclose (must be 120 days or more late) but it also tells mortgage companies when a foreclosure (even if more than 120 days late) must be cancelled.

Not “should” be or “maybe” but instead must absolutely be cancelled.

If you submit a proper loss mitigation package (including loan modification) more than 37 days away from a scheduled foreclosure, then the foreclosure cannot occur.

If the foreclosure is not even scheduled, then a proper loss mitigation package will prevent one from happening.

This is why I mentioned in the first secret that if you are getting close to or even at the 120 day mark, you need to make sure you have properly submitted a loss mitigation request or package.  Doing so gives you the option to save your home and can also stop the foreclosure.

So what do you do now?

Have you submitted a loss mitigation request?  Did you fill it out properly?

Step two of our five step process is all about how to do a loss mitigation package and step four is all about the FDCPA and RESPA — if you are interested then sign up for our free video series to give yourself a greater chance of saving your home.

Use these secrets to help yourself and if you happen to sue the mortgage companies, this can help other homeowners because if we can make it too expensive for mortgage companies to violate the law, then they will stop.

If we can help you give us a call at 205-879-2447 or fill out our contact form — even better take the time and effort to go through our comprehensive video training course on saving your home from a foreclosure.

Best wishes!

John Watts

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