Jenny West featured in the ALFN Angle Fall 2017
The Best Defense is a Good Offense in Litigation
A LOOK AT HOW THE DOCTRINE OF JUDICIAL ESTOPPEL HAS EVOLVED INTO AN EFFECTIVE COUNTER-ATTACK FOR SERVICERS
While default rates across the country have significantly decreased, there remains a deluge of litigation brought against servicers. Contested foreclosures initiated by borrowers are often colorful, and take on a variety of forms depending on the jurisdiction. Borrowers’ efforts to stop foreclosure or delay proceedings indefinitely may include filing a counter-claim in a judicial proceeding or filing separate action alleging wrongful foreclosure and requesting injunctive relief. These claims often follow trends specific to the jurisdiction, and include alleged statutory violations, standing or document issues, or some other type of servicer misconduct or omission.
Many of these lawsuits lack merit, and are brought primarily to delay proceedings. In many of these cases, the borrowers are significantly in default on their loan, and there may even be an element of bad faith, particularly in cases where the relief requested is not commensurate with the actual violation. For example, a defect in the origination documents should not excuse a failure to make mortgage payments. However, many judges are reluctant to dispose of borrowers’ claims, frivolous or not, too quickly. The end result is increased costs to servicers and delayed foreclosures.