Court Rejects Mortgages Lender's Claim

Amongst the thousands of mortgage foreclosure actions that are pending, the victories by consumers are becoming a more frequent occurrence.  A Federal Court in the Southern District of New York recently decided that a bank foreclosing on a mortgage could not proceed with the action because it could not establish the title to the mortgage it was seeking to foreclose.  The Court dismissed the complaint and essentially determined that the encumbrance on the property that the bank attempted to collect on was not legally sufficient and was set aside.  Because the mortgage was not legally sufficient, the mortgage debtor was released from the mortgage debt and became title holder to the property free and clear of all liens and encumbrances.

I would like to clarify that I am not saying that all foreclosure actions would have a similar outcome.  However, in the process of defending foreclosure action, we have a discovered thousands of defects in the mortgages executed that could pose serious problems for the financial institution prosecuting the claim.  Therefore, when confronted by these defective instruments in a court of law, the banks tend to be more receptive to modifying the contractual terms of the mortgage.

In conclusion, it is important to realize that before raising a defense attacking the validity of the mortgage documents, one must investigate, conduct discovery and analyze the documents, all of which require specialized knowledge.  It also requires a license to practice law and the capacity to go to a court of law and raise these defenses.  Unfortunately, on a daily basis I come across individuals that have relied on the promises made by these so-called “mortgage consultants.”  Their homes are now in the possession of the banks.

Luis A. González
Attorney and Mediator
L. A. González Law Offices, P.A

(407) 649 - 8389