Did you overpay for your home a few years back and now can no longer afford the mortgage? Welcome to the club: the growing ranks of homeowners that are being threatened with the loss of their home due to foreclosure. But you DO have options. And if you are wondering if it is worth fighting back – the answer is an unequivocal YES! The very worst thing you can do is nothing! Burying your head in the sand hoping it will all go away is NOT one of the options you should take!

Foreclosure defense litigation, what I call FREST (Foreclosure Representation to Extend Stay Time), when used properly, can help push through a short sale, allow you additional time to find a new job or save the money you will need to move once the extended time has ended.

How does Foreclosure Court really work? People say they are “in foreclosure” or “being foreclosed upon” but it is often unclear what that means. Foreclosure Court, which begins once the lawsuit is filed with a court, can be broken down into four parts: Service, Litigation/Judgment, Judicial Sale and Confirmation Hearing. Let’s take a look at each.

Service
Once a lawsuit is filed the defendant (person being sued) must be served, which is a fancy way of saying he or she must formally learn about the lawsuit. In a foreclosure action, a person is served by the plaintiff (the lender) in one of three ways:

• Personal Service (someone hands the proper papers to you directly)
• Substitute Service (someone hands the proper papers to a person at least 13 years of age who lives with you)
• Publication (after proving to the court that they tried but failed to reach you, the lender can post a notice in an approved publication and move forward with the case)

When you are served is important because that date starts the clock ticking on several time-sensitive legal rights that you have as the homeowner.

As attempts at service are made, you may receive a document titled “Notice to Homeowners from Circuit Court of Cook County: Free Help to Homeowners in Foreclosure.” As you read it, you may think it’s good information you can trust. Wrong! The document includes this statement: “To participate in the foreclosure mediation program you should appear in Court on your Case Management Date.” If an attorney gave a client this advice, he or she could be sued for malpractice!!

To appear in court before being legally served is never in a homeowner’s best interest – EVER! Here’s why: one of the strongest defenses an attorney can use in a FREST is filing a Motion to Quash. This means the homeowners argue, through an attorney, that they were improperly served. If the homeowners win, the entire case is undone and the lender must start over. If homeowners take action in a court proceeding without first filing the Motion to Quash, they may waive this legal right. Even if the other side did everything wrong – too bad!

Litigation/Judgment
Once you have been served, the lender litigates — proves their case to the court — to obtain a judgment — an order from the judge stating he or she agrees with the lender.

One of the biggest misnomers I hear regularly is, “Since I didn’t actually pay my mortgage I know there is nothing I can do.” Wrong! The fact that you haven’t paid does not mean you cannot FREST. I have never seen a situation that offered no affirmative defenses (legal reasons why the lender shouldn’t win until they fix something they did wrong) that I can raise on behalf of my client and legally extend the time frame of the lawsuit to last much, much longer.

Foreclosure defense law, which is not the same as real estate law, is complicated and there are many places in which a person representing him or herself, or even an attorney, can get tripped up. For instance, the court’s standard answer form for responding to a complaint – the document filed by the lender that states why they should get your house – allows a homeowner to “admit,” “deny” or “neither admit nor deny because of insufficient evidence” all allegations. Big problem: foreclosure defendants cannot use the third option without harming their case.

In regular cases, if you choose option three – i.e. neither admit nor deny because you don’t know – the person suing you has to prove the fact is true. Here, that’s not the case. Foreclosure Court has a law that says anytime you use option three, you are really using option one (admitting that the statement is true)!! So the lender is not required to take any additional steps! Knowledge of the law and working with a specialized attorney can help you use this and other legal details to your favor.

Judicial Sale/Sheriff’s Auction
In a regular case, when the person suing you wins a judgment, the matter is closed. Not so in Foreclosure Court. In Foreclosure Court, getting a judgment is only the half-way mark. After the judgment is entered and three months have passed without the homeowner having paid the amount set forth in the judgment, the property is sold at a judicial sale, also called a sheriff’s auction. It can be purchased by anyone but usually is purchased by the lender.

A quick, true judicial sale story demonstrates the power of a Motion to Quash. In this instance, a client called me the day after the judicial sale for help. People had showed up at his house asking if they could see the inside so they could decide if they wanted to bid at the auction taking place that day. I explained it would cost $1,500 to review the paperwork and he’d pay a flat fee of $300 a month for the duration of the case which, because he procrastinated until the 13th hour, unfortunately might not have been long. The client agreed.

The client, like many of us, had never appeared in court until the situation literally came knocking on his door. After reviewing the file I found he had not been properly served. I filed the Motion to Quash and won – thereby undoing the judicial sale. The lender was required to start the entire process from the beginning. What’s even better, this client had more affirmative defenses then I’ve ever seen in one case. The litigation phase of this process is going to take years. The lender may become so frustrated that they agree to a loan modification so the payment reflects what the property is actually worth.

Confirmation Hearing
Once the judicial sale is over, the lender has to compile the necessary paperwork and submit it to the court during the confirmation hearing. The court judge reviews the judicial sale paperwork and if it appears to have been done correctly, approves the sale. You can still take legal action even after the judicial sale – but it must be before the confirmation hearing. A court will not approve a judicial sale in which the homeowner can prove:

• that proper notice of the sale was not given,
• that the sale terms were unconscionable,
• the sale was conducted fraudulently or
• “that justice was otherwise not done.”

Once the confirmation hearing has occurred and the judicial sale is approved, then it becomes time for the homeowner to start packing. The case is officially over. The court gives the homeowner 30 days after the confirmation hearing to leave the premises. When that time elapses, a sheriff will check the property and speed up the process if the homeowners haven’t left.

To sum all this up, if you are facing foreclosure but want to keep your home or need time before moving on, take action! Do not bury your head in the sand hoping it will all go away. The complex arena of foreclosure law offers many points of cross-checking and time stays.

Karen S. Coffey
Coffey at Law, LLC

Karen S. Coffey, owner of Coffey at Law, LLC, concentrates her practice in the areas of real estate closings, estate planning, small business law and FREST – her self-coined acronym for Foreclosure Representation to Extend Stay Time. Learn more online at www.coffeyatlaw.com