Recently, many homeowners in trouble have caught on to the less than scrupulous practices of lenders, and contested their foreclosures. Of course, the legal proceedings of foreclosure can seem a very tangled web to the uninitiated, and so it’s important to ensure that you be meticulous in following the right procedure.

Prior to contesting a foreclosure, it is often necessary to buy time for legal council to wade through the necessary documentation and make its case. Since the right of redemption is an equitable one, the borrower can begin by asking an equity court for an injunction, essentially forcing the lender to cease all actions regarding repossession and foreclosure. If repossession is near at hand, the borrower may even be forced to take out a temporary restraining order. Still, the borrower may have to post a bond equalling the debt. This is intended as a means of protecting the creditor should the borrower’s efforts to halt the foreclosure prove to be merely an attempt to cheat the lender and escape their debt.

Following the staying of the lender’s hand, contestation of the foreclosure on one’s home can ensue. One of the first legitimate reasons for contesting a loan in foreclosure (of which much has been made in recent days due to two highly publicized court cases in the U.S.) is that the lender often does not legally own the loan. Many loans are sold in ‘pools’ consisting of several hundred or even thousands of loans. In the past, many such pools have, it seems, been sold without the original lender following the legal requirements of sale of the mortgage and its accompanying promissory note – which includes signing off on an assignment indicating the transfer of ownership.

Often the purchasing parties have been banks or other financial institutions, which in turn sold the rights to the monthly mortgage payment income to investors, while transferring the responsibility to collect those payments to companies specializing in mortgage services.

The end result is that neither the bank, nor the investors, nor the companies can legally be said to own the mortgage contract. Having acquired these pools, they nonetheless don’t actually possess the legal right to bring forward an action for foreclosure. In cases where the original lending companies have gone out of business, it becomes pretty much impossible for the new loan owners to acquire the necessary assignments, meaning that, for borrowers in the position of having such a mortgage contract (and lawyers quick enough to see the facts) it becomes impossible for anyone to bring foreclosure actions on their homes.

This means that their debt is reduced to nothing, and that, for all practical purposes, they own their homes free and clear. Rulings in such cases are, however, brought without prejudice – meaning that banks that succeed in later acquiring an original assignment can resume foreclosure proceedings.

The second legitimate method of contesting foreclosure, at least in the U.S., involves alleging that the initial loan documents were legally fraudulent. Many lenders in the U.S. have, in the past few decades, routinely violated laws by misusing legally accepted loan practices, including disclosure requirements and requirements on fair lending practices. Some have gone further by engaging in blatantly predatory lending practices. These last involve untruthful or improper or untruthful marketing and selling practices that can be proven in some way to exploit mortgagers.

If you think that you have been subject to any of the above-mentioned practices, your best bet is to get in contact with a qualified attorney, who will (hopefully) be informed of the most recent developments in his field, and be able to guide you through the often torturous convolutions of legal proceedings.