Mortgage Litigation Empowers the Borrower

Mortgage Litigation is the action of filing a law suit against a Lender, Servicer, Investor or combinations of those entities.  During mortgage litigation borrowers are empowered in the legal process when they file a suit by enjoying the position as a PLAINTIFF, and literally putting the “other side” on the defensive as DEFENDANTS.

There are several options when considering mortgage litigation including ,but not limited to, venue in State or Federal Court; State or Federal “Causes of Action”; Individual, Class Action, Mass Joinder/Mass Tort.

Let’s discuss where a suit can be filed and what to consider:

State court judges are almost exclusively elected officials who are answerable to their constituency.  The purview of State judges typically is more locally focused, meaning their decisions impact their immediate community.   State courts are limited to considering only state level laws, rules and issues.  Over the past several years as litigation by homeowners has grown, State courts have generally been more empathetic to consumers than the Federal courts.

Federal court judges are appointed not elected, serve for life, and generally have the autonomy to make decisions without accountability to the general public.  Federal courts can consider federal laws and state laws that overlap or impact federal issues, rules, regulation and legislation.  Federal courts have treated individual law suits dismissively, very often appearing prejudiced to the interests of the national mortgage institutions regardless of the merit of individual cases. For those reasons it is not uncommon for national lenders, servicers and investors to attempt to move a case filed in State court to a Federal court.

In response to the Federal courts refusal to enforce borrower’s federal rights, many states legislators have created “Home Owner Bill of Rights”, or HBOR’s. These HBOR’s replicate if not duplicate federal laws for the protection of the states mortgage borrowers whose cases can then be heard in State courts by locally elected State judges. Coast to coast, from Nevada, California, Minnesota, Florida to New Jersey and Pennsylvania to name a few, states are creating new or enhancing existing laws specifically intended to provide consumers with protection at the local state level.

David Rudolph


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