How has foreclosure case law changed over time?

Foreclosure has been a part of the way home loan lenders do business for a very long time, and over the course of that time, it’s seen important changes that impact both lenders and borrowers in significant ways. In many cases, state and federal courts have been at the forefront of these changes. Given the nature of a foreclosure case, disputes inherently arise in many cases, allowing for the courts to closely analyze whether the foreclosure process is adhering to fair legal standards.

The result of this continual analysis over the course of countless cases is that foreclosure case law has become increasingly borrower-friendly in certain ways. Broadly, it’s become more challenging for a lender to complete the foreclosure process due to certain lending practices, particularly discriminatory ones, having been outlawed in the present day, as well as an increased amount of attention given to the factor of promissory fraud.

In other ways, though, foreclosure law has remained a difficult challenge for a borrower to navigate. In states where nonjudicial foreclosure is an accepted practice, courts have upheld the ability of lenders to begin the process without approval from a court for steps like initiating an auction or evicting the borrower.

In this blog post, we’ll take a closer look at how foreclosure case law has changed over time to give you a better sense of where you may stand now in the face of a foreclosure proceeding.

Completing a foreclosure has become more difficult

In some ways, lenders have a tougher time foreclosing on a borrower’s property now than they once did. As mentioned previously, this has a lot to do with the banning of certain discriminatory lending practices on the basis of factors like race, gender, religion, or age. Additionally, though, several states don’t allow or don’t favor the practice of nonjudicial foreclosure, meaning that most proceedings require direct oversight from the courts at every step.

In addition to these broad changes to foreclosure laws, the courts have ruled in favor of borrowers at times of emergency and economic hardship, as well. In the era of COVID-19, eviction moratoriums became the rule in many states, allowing many borrowers who otherwise faced the threat of removal from their homes at the end of the foreclosure process to stay months longer than they would have otherwise been able to.

Foreclosure protections aren’t permanent and all-encompassing

Though protections have generally increased in substantial ways for borrowers in foreclosure cases, these protections don’t account for every potential threat they face. The flip side of the point about nonjudicial foreclosure, for example, is that it is permitted in 20 states. In these regions, courts have ruled to sustain the practice, restricting the ability of borrowers to take action against lenders without verifiable authority to foreclose on their property.

Additionally, the temporary protections provided to homeowners facing the threat of foreclosure and eviction have since expired in most states, like New York. While the expanded number of permanent protective laws is a helpful benefit to these borrowers, the expiration of temporary protective measures is also a reminder that while the law may be more friendly to borrowers, it won’t shield them from the consequences of foreclosure forever.

Get help navigating the foreclosure of your home with Claims Surplus

Foreclosure case law may have changed in substantial ways over time, but one thing hasn’t: the fact that you need expert help to navigate foreclosure if you’re facing the threat of losing your home and assets. That’s where Claims Surplus can help. We can assist you with finding an attorney and help keep you informed with crucial information about factors like surplus funds that can help you keep as many of your assets as possible. Ready to get started? Contact us now!