What is a wrongful foreclosure?

by | Jan 6, 2020 | Real Estate

Banks and mortgage lenders are supposed to help customers buy homes. However, there are millions of homeowners here in Texas and elsewhere that feel more like victims than customers. This can happen when the lender wrongfully forecloses on the homeowner, particularly if there are instances of fraudulent lending or unethical business practices involving the servicing of the consumer loan.

Common examples of unfair practices

Banks are in the business of making money, and less ethical ones will stoop to such practices as:

  • Improper loan modification
  • Violating the mortgage’s terms
  • Unfairly raising interest rates
  • Unnecessary insurance coverage
  • Violation of state law
  • Falsified foreclosure documents

Often, they will use the above tactics to propose the solution of selling the home, but homeowners do have some recourse.

Laws are in place to protect homeowners

The state and the federal government have laws on the books for protecting families from the above predatory practices. Moreover, these illegal practices can cause other damages and expenses as well. Victims in these circumstances do have options for fighting back. Be wary of services or scammers that promise to help; instead, it is often best to use an experienced attorney to file a restraining order or a lawsuit to secure compensation, negotiate a settlement and protect one’s credit score.

There is a statute of limitations

Wrongful foreclosures have a statute of limitations of four years here in Texas, but those due to natural disasters may have a different timeline. While many debtors may face other challenges as well, such as filing bankruptcy or addressing other financial issues, it is nonetheless unwise to delay a response to wrongful foreclosure and lose the home before the fight even begins.