Derek J. Soltis Bankruptcy Attorney

Shotgun Approach to Foreclosure Defense – Backfires

Foreclosure Defense Needs to be Well Thought Out or there can be Consequences

The attorney for Plaintiff’s,  KARUN N. JACKSON and URSULA D. JACKSON has to explain why he should not have to pay double the bank’s costs and expenses, including the attorney’s fees that the bank incurred in defending the appeals of his client’s. Normally, the American rule in court is that everyone bears the cost of their legal costs including their attorney, however, if there is a law that shifts costs or a contract is written that the winner of a court case is allowed to shift legal costs and attorney fees it sometimes hurts the people trying to defend their foreclosure.  In this case the court relied on cases Pelletier v. Zweifel and Cramer v. Sarasota County School Board to make Attorney Kenneth James Lay of Hood & Lay  defend the filings he submitted with the court as not being frivolous.

Attorneys that file Frivolous Motions will face Sanctions

Federal Rules of Appellate Procedure 38 provides that ” [i]f a court of appeals determines that an appeal is frivolous, it may, after a separately filed motion or notice from the court and reasonable opportunity to respond, award just damages and single or double costs to the appellee.” Attorneys that are determined to have filed frivolous motions will face sanctions.

When working with an attorney, you may have read online about foreclosure defenses that were being tried in 2008-2012, many of these defenses have been thrown out by courts.  When working with an attorney, you need to understand what can actually win in court, and what will be thrown out as being frivolous.

In this case, JACKSON v. BANK OF AMERICA, N.A., the court believed that the appeal involved an abuse of process engineered to delay the execution of a foreclosure judgment.  At times for a foreclosure defense, a delay can be used at times to get the needed time to allow certain things happen. For instance, if the home is going to be sold and the only thing needed is time to close, delay in the court system to stop a foreclosure makes perfect sense. Going in front of a State Court judge with an Order to Show cause asking for time is a normal tactic that the court many times will agree to, especially when everyone including the bank will benefit from the sale. Or, delay having a loan modification completed in or outside of bankruptcy. At times a loss mitigation or loan modification will have been turned down for a technical reason that to most people did not make sense, but given a second chance at a loan modification, the bank will agree to the process. For isnstance, Wells Fargo may have accidentally foreclosed on over 400 homes. In this type of situation delay to get the paperwork sorted out could have helped these homeowners.

Short Payoff Versus Short Sale

Delay to refinance a home prior to a sheriff sale also makes sense.  There are businesses that will attempt to buy the not from your bank to allow to refinance  At times banks allow for a Short Payoff as part of loss mitigation in order for the bank to take less money that is owed on home instead of foreclosing.  This is different than a Short Sale, as the home owner is the one that keeps the home in the end.

Reading the Appeal, there appeared to be several sections that started out strong to state a cause of action, however, the pleading did not follow-up with any facts or reasoning to support the claim. When preparing an answer or appeal, claims need to be based in fact and follow the court rules.  For State Courts and Federal courts, the rules are different. You should consult with an attorney prior to filing anything on your own.

Derek J. Soltis, Esq., MBA/MS is a New York State Licensed attorney, focusing on Foreclosure Defense and Bankruptcy who has helped many people with these issues.

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