If you are facing a nonjudicial foreclosure and want to stop the process, you might want to consider filing a foreclosure lawsuit in court. By asking for a temporary restraining order (TRO) and preliminary injunction, you can ask a judge to halt the foreclosure sale while you argue that the lender failed to follow state foreclosure laws, federal mortgage servicing rules, or the terms of your deed of trust.
While every foreclosure case is unique and different states, and even different courthouses, have their own procedures, here’s a general step-by-step explanation of how you might fight a nonjudicial foreclosure by taking the foreclosing party (the lender) to court. Because the stakes are high, it's a good idea to consult with a foreclosure attorney as soon as possible to explore defenses, loss mitigation options, or even bankruptcy to stop an imminent sale.
Challenging a Nonjudicial Foreclosure by Filing a Lawsuit
To challenge a nonjudicial foreclosure, you’ll have to file a lawsuit to get a judge’s attention. And you’ll have the burden of proof because you want the judge to stop a proceeding (the foreclosure) that's already authorized by the deed of trust you signed with you took out the loan.
You must file a lawsuit to get your day in court in a nonjudicial foreclosure. This action should be accompanied by a motion for a temporary restraining order (TRO) and preliminary injunction to enjoin (stop) a foreclosure sale while your claims are being litigated. Most people also ask the court for a permanent injunction.
Getting a Temporary Restraining Order
In your application for a TRO, you must convince the judge that you’ll suffer “irreparable injury” if the foreclosure happens. Most courts will agree that losing your home to foreclosure causes irreparable harm.
A TRO is often granted without a formal notice or hearing, meaning the lender might have a short time to prepare a response, say a day or two. If the lender doesn’t file a response, the judge probably will grant the TRO.
However, you might have to post a bond to protect the lender from economic harm if you eventually lose the case. Getting a bond can be expensive, but you might be able to get the bond requirement waived under some circumstances, like if your income is low enough or if the court decides that the lender’s interest is adequately protected. (Some courts have decided that a bond isn’t required in a foreclosure because the lender has a secured interest in the property and will eventually be permitted to proceed with foreclosure if the court rules against the borrower. This is especially true in cases where the property value exceeds the amount the borrower owes.)
Alternatively, you may propose paying the bond by making payments (such as at your regular monthly mortgage payment amount or in an amount that would offset any expense the lender might incur during the process) or, in some cases, in a de minimus (minimal) amount.
A TRO will typically last until a hearing in which the court may issue a preliminary injunction that would stop the foreclosure pending a full trial on the matter.
Preliminary Injunction
At the preliminary injunction hearing, the court will review each party’s documentation, which are often the same kind of documents used in a judicial foreclosure. The burden is on you to prove that the foreclosing party doesn't have the right to foreclose, like by proving it didn’t comply with state or federal laws or the terms of the deed of trust.
You’ll need to convince the judge at the preliminary injunction stage that the foreclosure should be put on hold until you can produce your full case at trial. Typically, you’ll use declarations or affidavits from you and other witnesses to establish the facts you believe entitle you to stop the foreclosure.
At this hearing, the court must decide whether:
- you’re likely to prevail if the case goes to trial, and
- the injury that you would suffer from the foreclosure outweighs the injury that the lender is suffering by not getting paid.
If the judge decides these issues in favor of the lender, the TRO will end, and the court will deny your motion for a preliminary injunction. While you can still proceed with your lawsuit, the foreclosure will likely go ahead because there’s no injunction to stop it. (At this point, it’s a long shot, but you might be able to ask a higher court to overrule the denial.)
But if you can convince the judge to stop the foreclosure until you can produce your full case at trial, the judge will issue a preliminary injunction. The injunction might order the lender to send you a correct Notice of Default or it might simply keep the TRO in effect.
At this point, the lender might try to reach a settlement with you, give up on the current foreclosure and start over, or meet any conditions laid down by the court and then ask the court to lift the injunction. Otherwise, you'll go to trial. The preliminary injunction enjoins the foreclosure until the trial.
Don't Forget to Record a Lis Pendens
"Lis pendens" is Latin for “suit pending.” By recording a lis pendens notice in the county records, you put the public on notice of your suit.
If you fail to record a lis pendens and, for whatever reason, a foreclosure sale happens, the buyer (unless it is the lender or someone closely associated with the lender), who’s called a “bona fide purchaser for value,” will be presumed to have had no notice of your pending suit and likely get good title to the property.
How Long of a Delay You'll Get
It’s impossible to guess exactly how long it will take for your case to wind its way through this process. If you have a valid argument, it could take at least several months. But if the only basis for your challenge is that the lender made a minor procedural violation, you’ll probably gain only a few weeks of delay even if you win.
How to Get Help With Fighting a Nonjudicial Foreclosure
You’ll most likely need to hire an attorney to succeed in your lawsuit, and, unfortunately, litigation is always expensive, particularly when you have the burden of proof. So, unless the lawyer thinks you have a very good case, you might not want to bother with a lawsuit.
But if you think you have a solid defense against foreclosure and want to keep your home, you should seriously consider hiring a lawyer. If you wait too long, you might not have much time to fight the foreclosure. Sometimes filing a bankruptcy petition might be necessary to stop an imminent foreclosure, which would then give you time to pursue your claims.
If you can’t afford a lawyer, you might be able to get free legal help from a legal aid office if you meet specified criteria. You can find a list of various legal aid programs on the Legal Service Corporation's website. If you want to try to avoid a foreclosure by getting a loss mitigation option, like a repayment plan or modification, a HUD-approved housing counselor (who won’t charge you anything) might be able to help you.