A foreclosure is either nonjudicial or judicial depending on the state where the property is located (and, in some cases, your particular circumstances). In a nonjudicial foreclosure, the property can be sold without any court oversight. With a judicial foreclosure, the foreclosure is processed through the state court system and a judge is required to sign off on the foreclosure.
The judicial foreclosure process starts when a lender sues a delinquent borrower in the county where the property is located, often by filing with the court a document called a “complaint for foreclosure” or “petition for foreclosure.” This document is then served to the borrower along with a summons. A notice of lis pendens (which is Latin for “suit pending”) is recorded in the county records. These three documents constitute notification of the foreclosure lawsuit.
The complaint for foreclosure is the document that outlines the lender’s claims underlying the lawsuit. For example, the complaint will describe the mortgage, the promissory note, the property to be foreclosed, the default, the amount due, as well as list the defendants and describe their interest in the property. It will also include exhibits, such as a copy of the note and mortgage. The complaint will also state what the lender seeks (called “relief”) from the court. For example, the complaint will typically ask the court for the right to sell the property and apply the proceeds of the sale to the mortgage debt. The complaint may also ask for a deficiency judgment if the proceeds at the foreclosure sale do not fully cover the total debt amount.
The notice of lis pendens is a document that is filed with the county clerk in the land records to provide notice to the public, subsequent lienholders, and potential purchasers of the property that a foreclosure suit encumbers the property.
The summons informs the borrower that an answer must be filed if the lawsuit will be contested. Summonses are issued for each defendant who is named in the foreclosure lawsuit. For example, the homeowners will be named as defendants, along with any lienholders (like second mortgage holders) and judgment holders that are of record at the time the suit is filed. Summonses notify the defendants of their rights and state how many days are provided to respond with an answer to the allegations of the complaint for foreclosure, usually 20 or 30 days. A defendant who wishes to respond to the claims in the complaint must file an answer within this time period.
To fight the foreclosure, a defendant must file a written answer to the complaint with the court. The answer should include responses to each of the claims made by the lender it its complaint. There should be a numbered paragraph response for each of the numbered paragraphs of the complaint. In each of the numbered paragraphs in the answer, the defendant must admit, deny, or state that there is insufficient knowledge to admit or deny the allegations for the corresponding numbered paragraph in the complaint for foreclosure. The lender must prove any allegation that is denied. If an allegation is admitted, the court will accept it as fact.
In addition to responding to each of the lender’s claims, a defendant may wish to provide defenses or affirmative defenses as part of the answer to the foreclosure. A defense is a reason why the foreclosure lawsuit should not have been filed in the first place. Some examples of defenses are that the mortgage was reinstated (meaning you paid the past amounts due and the loan is now current) or the loan was paid off in full. An affirmative defense is a reason why a judgment should not be granted in favor of the lender. There are many possible affirmative defenses or counterclaims to a foreclosure action, including Truth in Lending Act violations, Fair Debt Collections Practices Act violations, predatory lending, standing, and failure to adhere to procedural foreclosure requirements.
The answer to the complaint must be signed by the defendant and a copy mailed to the lender’s attorney. The appropriate mailing address can be found in the complaint, usually under the attorney’s signature. The answer must also be filed at the courthouse. Look on the summons to find the address of the court.
If you do not want to fight the foreclosure, you do not have to respond to the summons. Then a default judgment will be entered. A default judgment means that you lose the case by failing to answer and the lender will be granted the relief that was sought in the complaint. The lender will receive a foreclosure judgment and will be able to sell the property. Depending on the laws of your state, the lender may also be entitled to a deficiency judgment. (See our article on Deficiency Judgments.) If you want to fight the foreclosure, you must file an answer to the complaint. The lender must then prove its case to the court before it will be allowed to complete a foreclosure sale.
Keep in mind that if your foreclosure is nonjudicial, the foreclosure will not go through the court system and you will not receive a complaint or have an opportunity to file an answer. To fight a nonjudicial foreclosure in court, you will need to file your own lawsuit and raise issues such as those listed above.
It is certainly possible to respond to a summons by preparing an answer to the complaint “pro se” (without hiring an attorney), although an attorney may be able to call attention to defenses or flaws in the lender’s complaint that you may not notice. If you feel an attorney’s assistance would be beneficial in reviewing and responding to a lender’s complaint for foreclosure, contact a competent attorney in your area.