There's a new litigation trend we've been seeing in California – the rise of the "foreclosure defense" lawsuits.
Basically these lawsuits allege that the lender no longer owns the original promissory note and therefore cannot foreclose on the borrower's property. Of course, to keep things interesting, the lawsuit alleges all manner of violations of any lending statute they can think of from TILA to RESPA to HOEPA and the Fair Debt Collection laws.
Additionally, the mortgage broker, the appraiser and even the Realtor are roped in as defendants.
In short these cookie-cutter lawsuits are sham lawsuits intended to extort a few more months of free rent. The very nature of these lawsuits is offensive to law-abiding citizens who pay their bills.
Instead, these plaintiff-homeowners in the "foreclosure defense" lawsuits have been misled by foreclosure defense gurus to believe they should be entitled to own the house "free and clear" despite not having paid off their mortgage loan.
This smacks of the same rhetoric the Mortgage Elimination folks used a few years back. Of course, the perpetrators of the Dorean Group mortgage elimination scheme were both sentenced to over twenty years imprisonment.
The law does not support the theories espoused by these new foreclosure defense gurus and early law and motions efforts are key in discouraging these lawsuits.