There is a lot of talk about foreclosures in the news today. One aspect of foreclosures that has received little attention is difference between a judicial state and a non-judicial state. A judicial state requires that a lender file a foreclosure action in the court system and get an order from a judge before the property goes to a foreclosure sale. This provides the opportunity for the homeowner to assert any claims against the lender he or she may have and allow a judge to make a determination before the homeowner loses the home.

Homeowners that do fight the foreclosure in the court system obtain a better result and have a much higher rate of success in obtaining loan modifications or other favorable outcomes. In the states that follow this protocol, lender abuse, misrepresentation, neglect and lack of oversight has been exposed. Florida is in the top four of the highest foreclosure rate in the country and is a judicial foreclosure state. The amount of lender wrong doing that been exposed in the clients we represent has been enormous. This abuse would have never been exposed if we did not have the ability to fight these cases in the court system.

However, not every state follows the judicial foreclosure model. In fact, the majority of the states does not require a judicial process at all, but instead follow what is termed a non-judicial foreclosure. In a non-judicial foreclosure state, the lender only has to put the borrower on notice as to the default in payments and schedule the sale in as little as 30 days in some states. This process does not give the homeowner the opportunity to assert claims against the lender before the property is taken. Unfortunately, for the thousands of homeowners that do have legitimate claims to assert against their lenders they are prevented from doing so before their property is taken. More importantly, lenders that have engaged in misconduct get off the hook without their bad behavior being exposed.

Most of the lender abuses occurred in states that are now the hardest hit in the country with foreclosures. The three other hardest hit states in the country for foreclosures are California, Nevada and Arizona. All three of these states are non-judicial and mortgage lenders have continued to avoid taking responsibility for their actions in these hard hit states. Therefore, homeowners that have been taken advantage of or lied to in these states currently have no way to assert their claims to a third party who can make an impartial ruling on those issues before their property is taken. That is a travesty and is my humble opinion un-American.

Another unfortunate aspect of the non-judicial process is a lack of oversight as to the implementation of the HAMP (Home Affordable Modification Program) passed by the Obama administration earlier this year. This program provides that if a lender is participating in the program and a homeowner qualifies the lender MUST approve the loan modification. Unfortunately, some of the criteria listed in order to qualify is a matter of opinion and can be debated. In a non-judicial state, if the lender tells the homeowner he or she does not qualify for it that is the end of it. There is no impartial third party that can make a determination as to whether the homeowner really qualifies. In a judicial state, the homeowner can assert this claim in the court system and the judge hearing the case can make this determination.

As a result of this injustice, Kaufman, Englett and Lynd, LLC (KEL Attorneys) is going to start taking cases in the State of California this month. We will be representing homeowners facing a foreclosure and filing a lawsuit as the Plaintiff against the lender in order to assert any claims the homeowner may have against the lender. We will immediately move for injunctive relief so the lender is prevented from proceeding with the foreclosure until the homeowners claims are heard by a judge. We will be filing in state court and federal court if necessary. In the next couple of months, KEL Attorneys will also be going into Nevada and Arizona as well. Lenders should not be able to steam roll homeowners in foreclosures actions without the opportunity to be heard by a fair and impartial third party. We at KEL Attorneys will do everything in our power to make sure this most fundamental right is not denied.

Published: November 4, 2009

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