Mortgage Foreclosure Defense in New York State

Of the millions of people in the United States facing foreclosure of their homes each year, few hire an attorney to defend them, assuming that there is nothing an attorney can do to stop a foreclosure.  This is often a huge mistake.  In New York, a mortgage foreclosure is neither simple nor cut-and-dry.  If the foreclosure is properly contested, it is possible to delay or defeat the foreclosure completely or obtain a very advantageous settlement.

To illustrate how difficult it can be for an alleged mortgage holder to foreclose on a home in New York, we will describe our overall approach to defending clients against mortgage foreclosures.  Our strategy for defeating foreclosure actions, part of our overall approach to Debt Inversion, involves a combination of:  (1) forcing the mortgage holder to prove its entire claim against the homeowner, (2) asserting specific defenses to mortgage foreclosure lawsuits, and (3) bringing counterclaims (lawsuits) against the alleged mortgage holder, and third-party claims (lawsuits) against companies that were not originally involved in the mortgage foreclosure lawsuit.

The following information is for illustrative purposes only and not intended to substitute for the advice of a licensed attorney. To have any chance at successfully defending against a mortgage foreclosure, you generally must hire a licensed attorney. 

Forcing the Mortgage Holder to Prove Its Claim

In a mortgage foreclosure action, we force the party claiming to own the mortgage to prove its entire claim against our client and defeat any defense we raise (see below).  If the alleged mortgage holder fails to prove its entire claim, it cannot legally obtain a judgment of foreclosure or a monetary judgment against the homeowner.  This means we win the lawsuit.

For more information on how we force debt collectors and creditors to prove their claims against our clients, please see the Debt Inversion section of our website. 

Defenses Against Mortgage Foreclosure Lawsuits

In this section we list some defenses that we use to defend our clients in mortgage foreclosure lawsuits.  We have not attempted to translate the legal terminology into plain English or to explain the legal concepts behind each defense, because it would double or triple the length of this section.  The point we wish to make is that many excellent defenses are available, but they are complicated and should only be used by a licensed New York State attorney who understands them completely. 

General defenses that may apply to any debt collection lawsuit including a mortgage foreclosure: 

  • The Court lacks personal jurisdiction over the homeowner due to improper service of the summons and complaint.   Proper application of this defense in a mortgage foreclosure case can delay the foreclosure for up to six months, giving the homeowner a much longer time to improve her financial circumstances enough to negotiate a good settlement of the foreclosure lawsuit or to find other housing.
  • The plaintiff lacks legal standing to bring the action.
  • The plaintiff does not own the alleged promissory note.
  • The plaintiff did not pay fair and adequate consideration for the alleged mortgage and note and plaintiff would be unjustly enriched if plaintiff were to receive the relief requested.
  • The amount plaintiff claims to be due on the alleged mortgage and note is incorrect.
  • Documents and/or witnesses necessary to prove plaintiff’s claim are unavailable or nonexistent.
  • The complaint fails to state a claim upon which relief can be granted.
  • Plaintiff’s claims are barred, in whole or in part, by the applicable statutes of limitations.
  • Plaintiff’s claims are barred, in whole or in part, by the applicable principles of waiver, ratification, latches and/or estoppel.
  • Plaintiff’s claims are barred, in whole or in part, by the doctrine of unclean hands.
  • Plaintiff lacks standing because it has no business relationship with the homeowner.
  • The alleged lender(s) and mortgage holder(s) violated the Federal Truth In Lending Act.
  • The homeowner’s defense is based upon documentary evidence.
  • Plaintiff is not the real party in interest.
  • The plaintiff is not legally authorized to bring the action.
  • Defendant never borrowed any money from plaintiff and does not owe any money to plaintiff.
  • Defendant never entered into any contract or agreement with plaintiff to borrow or repay money.
  • Defendant never agreed to pay attorneys’ fees to plaintiff under any circumstances, and therefore plaintiff is not entitled to attorneys’ fees in this action. 

Specific defenses to mortgage foreclosure lawsuits: 

  • The homeowner was not duly notified of the alleged default as required under the alleged note and/or alleged mortgage.
  • The plaintiff has not fully complied with all of its duties and obligations under the alleged note and/or alleged mortgage.
  • The plaintiff has not fully complied with all preconditions to bringing the instant action.
  • The plaintiff does not own the alleged mortgage.
  • The alleged mortgage was not duly assigned, transferred or sold to plaintiff.
  • The note was not duly assigned, sold or transferred each and every time the mortgage was assigned, sold or conveyed.
  • Plaintiff has no recourse to collect any amounts from the homeowner not realized from any future foreclosure sale.
  • Plaintiff and/or its predecessors in interest of the alleged mortgage and note failed to respond to the homeowner’s request for validation of the alleged debt despite repeated requests.
  • The Statute of Frauds applies to invalidate any and all transfers of the mortgage or note that were not memorialized in writing at the times of the transfers.
  • In the event a monetary judgment is entered, the homeowner asserts her right to retain the amount of her homestead exemption as provided by law.
  • The alleged owner of the mortgage and/or note did not exist on the date of its alleged transfer of the mortgage and/or note to the plaintiff.
  • The documents memorializing the transfer or the mortgage and note to plaintiff were not executed until after the date of commencement of the action.  Accordingly, plaintiff lacked standing to bring the action on the date it was commenced.
  • Plaintiff’s claims were extinguished as a result of the bankruptcy of the original lender or a subsequent owner of the mortgage and note.
  • That defendant’s defense is based upon documentary evidence.
  • The Statute of Frauds applies to invalidate any and all transfers of the mortgage and/or note that were not duly memorialized in writing and executed at the time of the transfers.
  • In the event a monetary judgment is entered against the defendant, defendant hereby asserts, claims and reserves her rights to receive and retain her Homestead Exemption as exempt from judgment enforcement.
  • Plaintiff is not the real party in interest.

Defenses to foreclosures of mortgages converted into “mortgage backed securities”:

The defenses listed below may apply in the case of a mortgage for which the stream of mortgage payments have been sliced and diced into “mortgage backed securities” bought by investors.  The mortgage backed securities are held in a legal trust that collects payments from homeowners and distributes the income to investors in the mortgage backed securities. 

At least that’s how it was supposed to work. 

The conversion of ordinary mortgages into mortgage backed securities was the primary cause of the real estate market crash that led to massive bank failures and the current recession.

However, fortunately for homeowners facing foreclosure, the slicing and dicing of ordinary mortgages into mortgage backed securities makes it difficult for any one party to foreclose on the entire mortgage.

The plaintiff in a case involving mortgage backed securities is the trustee for the legal trust that administers the mortgage backed securities created from the original mortgage.

  • The plaintiff lacks authority to bring the action from the trust created to administer and collect and disburse payments on the mortgage backed securities. 
  • The trust is not duly permitted or authorized to own the entire alleged mortgage.
  • The alleged trust has no rights pursuant to the alleged mortgage.
  • The alleged trust has no rights pursuant to the alleged note.
  • The alleged trust is not duly permitted or authorized to receive all payments allegedly due on the alleged note.
  • Pursuant to the terms of its formation and existence, the trust is not permitted to own the entire mortgage and note.
  • The alleged trust does not contain the alleged mortgage allegedly executed by the homeowner.
  • The alleged trust does not own the alleged note.
  • The alleged trust does not own the alleged mortgage.
  • The alleged mortgage was not duly assigned, conveyed or sold to the alleged trust.
  • The alleged trust from which plaintiff allegedly derives its alleged right and/or standing to bring the action does not have or possess the legal right and/or standing to bring the action.
  • Neither plaintiff nor the alleged trust is in possession and/or control of the documents and/or witnesses necessary to prove its alleged claim against the homeowner.
  • Neither plaintiff nor the alleged trust owns the entire alleged mortgage.
  • Neither plaintiff nor the alleged trust owns or possesses the right(s) to receive all payments or amounts allegedly due or owed pursuant the alleged note.
  • Neither plaintiff nor the alleged trust owns or possesses the right(s) to receive any payments or amounts allegedly due or owed pursuant the alleged note.
  • Any alleged rights of plaintiff, the alleged trust, and/or any alleged predecessor(s) in interest with regard to the alleged mortgage were extinguished as a result of the bankruptcy of the original lender or subsequent mortgage holder prior to the time of the alleged conveyance of the mortgage and note to plaintiff and/or the alleged trust.
  • The lender or mortgage holder did not exist on the date of its alleged transfer of the mortgage and note to the trust.
  • The documents produced by plaintiff regarding the alleged transfer of the mortgage and note to the trust were executed after the commencement of the action.

Counterclaims against the mortgage holder, and claims against parties not yet involved in the lawsuit (third-party claims): 

The counterclaims and third-party claims available in a mortgage foreclosure action are generally the same as in other debt collection actions.  Rather then repeat all of them here, we ask that you refer to the following sections of the Debt Inversion website for ideas on lawsuits that your attorney might bring against the alleged mortgage holder (counterclaims) or another party not yet involved in the case such as a process server (third-party claims). 

Lawsuits for illegal debt collection
Lawsuits for debt collection crimes 
Lawsuits for illegal credit reporting
Debt Inversion

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