I sat in court just yesterday and watched a consumer find out a very hard lesson….

Bankruptcy will not necessarily stop a foreclosure sale!

The rules are technical and specific to each case, but multiple filings of bankruptcies and the dates on which the bankruptcy was filed play a major factor in the analysis of whether the bankruptcy will stop a foreclosure sale.  As I watched that consumer’s attorney try to argue the foreclosure sale should be stopped, I realized that the consumer’s attorney missed a major opportunity to stop the sale but counseling the consumer to file for relief under the Dodd Frank Act.  The act provides that if an application is pending, the foreclosure sale should not go forward. I pulled aside foreclosure plaintiff’s counsel and asked her whether they would go forward with the sale if the consumer raised Dodd Frank…her reaction was very dramatic….

NO WAY WILL WE MOVE FOR A FORECLOSURE SALE WHILE THE CONSUMER HAS A DODD FRANK COMPLIANT MORTGAGE MODIFICATION PENDING!

In the main claim between the parties, Counterclaim Defendant attempts to foreclose a mortgage (hereinafter “the mortgage”) which it claims it holds.
The mortgage is a “federally related mortgage loan” within meaning of 12 C.F.R. §1024.2(b) because it is a loan that was:

Secured by a first or subordinate lien on residential real property upon which there was located, or following settlement, was to be constructed using proceeds of the loan, a structure designed principally for occupancy of one to four families; and either was:

Made in whole or in part by a lender that was either regulated by or whose deposits or accounts were insured by an agency of the federal government;
Made in whole or in part, or was insured, guaranteed, or assisted in some way by the Secretary of the Department of Housing and Urban Development (hereinafter “HUD”) or any other officer or agency of the federal government; or, under or in connection with a housing or urban development program administrated by the Secretary of HUD or a housing or related program administered by any other officer or agency of the federal government;
Intended to be sold by the originating lender to the Federal National Mortgage Association, the Government National Mortgage Association, the Federal Home Loan Mortgage Corporation (or its successors), or a financial institution from which the loan is to be purchased by the Federal Home Loan Mortgage Corporation (or its successors);
Made in whole or in part by a “creditor” as defined in section 103(g) of the Consumer Credit Protection Act that made or invested in residential real estate loans aggregating more than $1,000,000.00 per year; or
Was originated either by a dealer or by a mortgage broker.
Counterclaim Defendant is a “servicer” within meaning of 12 C.F.R. §1024.2(b) because it is a “person” responsible for servicing a federally related mortgage loan.
Thirty-seven days before any foreclosure sale was scheduled with respect to the mortgage, Counterclaim Defendant received from Counterclaim Plaintiffs a complete loss mitigation application as the term is used in 12 C.F.R. §1024.41(b)(1).
Despite receiving Counterclaim Plaintiffs’ complete loss mitigation application thirty-seven days before any foreclosure sale was scheduled with respect to the mortgage, Counterclaim Defendant moved for a foreclosure judgment or order of sale, even though:

Counterclaim Defendant did not send Counterclaim Plaintiffs a notice that Counterclaim Plaintiffs were not eligible for any loss mitigation options or where such notice was sent but:

The appeal process in 12 C.F.R. §1024.41(h) was applicable;
Counterclaim Plaintiffs had requested an appeal within the applicable time period for requesting an appeal; and
Counterclaim Plaintiffs’ appeal had not been denied;
Counterclaim Plaintiffs had not rejected all loss mitigation options offered by Counterclaim Defendant; and
Counterclaim Plaintiffs failed to perform under an agreement on a loss mitigation option.
Consequently, Counterclaim Defendant has violated the express provisions of 12 C.F.R. §1024.41(g).
All conditions precedent to the filing of this action has occurred or has been waived.
Counterclaim Plaintiffs have retained the law firm of WeidnerLaw, P.A. to represent them in this matter and are obligated to pay said law firm a reasonable fee for its services.
CLAIM FOR RELIEF
COUNT I
Violation of 12 C.F.R. §1024.41
Counterclaim Plaintiffs re-allege and re-incorporate paragraphs 1-14 as if fully set forth herein.
Counterclaim Plaintiffs seek relief pursuant to 12 C.F.R. §1024.41.
Counterclaim Plaintiffs may enforce the provisions of 12 C.F.R. §1024.41 pursuant to 12 U.S.C. §2605(f).
As a direct and proximate cause of the Counterclaim Defendant’s violations of §12 C.F.R. 1024.41(g), Counterclaim Plaintiffs have suffered actual damages.
            WHEREFORE, Counterclaim Plaintiffs demand:
(a)    Judgment in their favor;
(b)   Actual damages that Counterclaim Plaintiffs have suffered by reason of Counterclaim Defendant’s violations 12 C.F.R. §1024.41;
(c)    Any additional damages as the Court may allow due to Counterclaim Defendant’s pattern or practice of noncompliance with the requirements of 12 C.F.R. §1024.41;
(d)   Pre-judgment interest on damages that Counterclaim Plaintiffs have suffered by reason of Counterclaim Defendant’s violation of the 12 C.F.R. §1024.41;
(e)    An award of attorneys’ fees and costs pursuant to 12 U.S.C.§2605(f)(3); and
(f)    Any other relief the Court deems just and proper.