A lot of homeowners today than just a few years ago are raising defenses to foreclosure lawsuits grounded on the issue of the real party in interest. Typically , this is the party that possesses the right it is seeking to compel . If a lender is not assigned a loan and mortgage appropriately , the question may be raised by the borrowers.
A mortgage is composed of two parts. The first is the promissory note, which is the borrowers’ responsibility for paying back the debt it takes out through a bank or other lender. The second thing is the defence interest the lender takes in the homeowners’ property, which is made up of the mortgage or deed of trust.
In terms of a foreclosure lawsuit, courts have typically held that the lender or institution that has been approved the note and mortgage is the party in interest. The servicing company may not be counted as the real party in interest, and the lender that was assigned the note must prove that it has the legal standing to foreclose on the property.
In fact, the assignee must be assigned both the mortgage and the promissory note. The debt by its nature is the main obligation to pay, when the mortgage contract represents only a security interest in the property. Neither can be transferred without the other, because, if the lender can not show he is interested in the debt by having the note assigned to it, it has no standing to foreclose on the mortgage.
A quantity of foreclosure lawsuits state that the foreclosing lender has lost the original note or mortgage, or it has been damaged or is otherwise unaccounted for. In such situations , the lawsuit may still go further , as long as the amount of the debt can be set up by extrinsic evidence .
Homeowners may be able to put off a foreclosure for a trivial length of time by raising the issue of who is the real party in interest. With so many lenders going out of business or being absorbed by other companies, and the securitization of the mortgage industry over the past decade, it can be almost impossible to tell which company owns a mortgage.
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