Jon Coats Law Blog

This week alone I have had 3 clients come into my office who where either already in a loan modification trial period with their lender, or were waiting to hear back from their lender about the status of their loan modification application, when they were served with a foreclosure complaint.  All three of these clients immediately called their respective lenders after getting served the complaint to ask what they should do about the lawsuit, and further, to question their lender as to why they were doing this when they had been actively talking with the lender and sending documentation back and for to obtain a modification (or like one of my clients, had actually already made payments under the modification).

All three of these clients were told “not to worry about it.” That’s right, all three were told by their lenders not to worry about the lawsuit they had just been served with because their trustworthy lenders were still working with them to get a modification, so the lawsuit was no big deal and “not to worry about it.”    Well, as would be expected, none of these clients sought the advice of an attorney and figured that because their lender just told them “not to worry about it” that they could ignore the lawsuit.  WRONG!!!

In all three cases several months have gone, i.e., from 8 months to over a year, since they were served with the foreclosure complaint.  Since being served the complaints none of them had received anything further from their respective lenders’ attorneys.  But just recently they all received this cool thing called a “Motion for Summary Judgment” in the mail.  “That’s weird” they all thought; “why am I getting this thing in the court case that my lender told me not to worry about 8 months or a year ago??”   “Let me call my lender and let them know that there is some kind of mistake here.”  Of course, when they call their lender they are told that their modification has been denied for whatever reason and that the foreclosure is proceeding.

What does this mean?  Well, in these particular cases it was very interesting to discover that while my clients had received the original lawsuit, and then the recently filed Motions for Summary Judgment, they never received the other pleadings that had been filed with the court, like the “Motion for Default”, i.e., a document that the plaintiff filed to tell the court that they had properly served the defendant with the lawsuit but the defendant failed to file any response, “so please go ahead and put the defendant homeowner in default” and let us move on to the next step of getting our final summary judgment and then sell the house at auction.

I have seen these a few other  times this year, and in the end it typically turns out ok for my clients because I file a Motion to Set Aside the default along with an affidavit from my clients telling the judge what happened, and we essentially ask the court to allow these clients the opportunity to now file a response to the complaint.  In general, as long as the facts are like the cases I have seen, you can get the problem fixed, but the real problem are the thousands of people out that to whom this happens that never go and see an attorney.  They may still be operating under the belief that what they lender told them a year ago about not worrying about the lawsuit is still true.  Unfortunately, they then discover a few months down the road that a summary judgment hearing has taken place and the court has scheduled a sale date for their home.

The lesson here is pretty simple, if you get served with a foreclosure complaint, see an attorney right away and DO NOT BELIEVE YOUR LENDER if they tell you “not to worry about it.”  Absent getting wiritten confirmation from the lender’s attorney that they have dismissed the case, the case is still moving forward, and if you fail to file a response within 20 days of being served with the lawsuit, they will seek a default against you, and from what I have seen, in most instances they won’t even tell you about it.