Consumer Law

Wrongful Foreclosure Lawsuits - Failure To Credit Payments

By M. Stan Herring

Given the increase in foreclosures in Alabama (and nationwide), we are often asked if we can file suit against the mortgage companies for foreclosing on our clients. The answer is "it depends - what did the mortgage company do wrong?"

The simplest type of case (not simple to litigate but the cleanest) is when a mortgage company simply does not credit the payments it has received. Then the mortgage company says you are behind on your payments and ultimately forecloses.

This seems so obvious that surely no mortgage company would do this. While it is obvious, it happens. So what do you need to do if this happens?

1. Get the proof that your payments were sent in and accepted. Show the check where it was deposited. Show the proof of your online payments. You must show without any doubt that the payments were made and accepted.

2. Show where you disputed or told the mortgage company that it was wrong and that you had disputed its claim that you are behind.

There are other things to do but those are two of the first things we insist on new clients showing us before we can go any further into looking at their potential wrongful foreclosure case.

One other thing to keep in mind - if the mortgage company claims you are behind (when you are not) or has actually foreclosed on you it is critical to pull your credit reports. Almost always you will have false information on your credit reports that needs to be disputed. If it remains, this can give you a federal claim under the Fair Credit Reporting Act (FCRA) which entitles you to recover damages and attorney fees.

We will write more about other types of wrongful foreclosure situations but we wanted to start with this simple concept that is surprisingly common - payments are made and accepted but not credited.

If you live in Alabama and would like to meet with us or would like us to send you further information, please contact us today.

Full post as published by Alabama Consumer Blog on March 13, 2009 (boomark / email).