By Jim Perez,
DebtHelp, Inc. Staff Writer
The best defense is a good offense.
Or at least says Carl von Clausewitz, an 18th century Prussian soldier and military historian.
But does this also pertain to fighting to keep from losing your home to the bank through foreclosure?
Yes, say some consumer rights groups.
And in the United States, one way to fight foreclosure is:
Yes, folks, truly Itâ€™s a Wonderful Life, and you can sue the Mr. Potters of your own private movies.
Consumer rights groups and legal-aid lawyers are joining forces with private lawyers to get a day in court for borrowers who, through shoddy underwriting practices, got loans they had little chance of repaying and, in many cases, shouldn’t have gotten in the first case.
These consumer advocacy lawyers say they aim to prove lenders granted fraudulent or “unconscionable” loans with terms skewed heavily in their favor, or to fight abuses by servicers, such as phony fees that cause homeowners to default.
Borrowers who go this route get the chance to not only stop foreclosures and rescind the loans, but to seek damages for abuses, in some cases
The number of lawyers specializing in consumer rights is small, and with the growing number of foreclosures, many are booked solid.
Melissa Huelsman, a Seattle lawyer who has focused on wrongful-foreclosure litigation since 2001, says her caseload has doubled in the past year.
Bill Purdy, a Soquel, Calif., lawyer, takes this approach. He first looks for violations of federal statutes such as the Truth in Lending Act, a 1968 law that requires disclosure of key terms of the loan and its costs. “There are tons of illegal loans out there, but nobody’s looking,” he says.
Most cases settle out of court. But courts in West Virginia and California have been most friendly to suits against lenders and servicers, says Margot Saunders of the National Consumer Law Center, which assists attorneys in such suits.
Check the National Association of Consumer Advocates for a list of attorneys specializing in lender/servicer abuses, or call your local legal-aid office or bar association.
But caveat emptor: In some cases, borrowers who lose a suit may get saddled with fees for the lendersâ€™ attorneys.