FAQ - TO DEBT CLAIMS COMMON TO ALL STATES
QUESTION: Are
there more defenses for the debtor in debt-collection actions or is the debtor
(residential or commercial loan) strictly limited to what is in the foreclosure
statutes?
YES: No, there are many more debtor defenses.
In every state there are valid defenses to debt claims and these must be raised in any debt analyses or debt dispute by a competent, licensed attorney. Defenses common to bare land, residential and commercial debts incurred within the last 5-7 years are violations of the myriad of Federal and state law related to consumer protection, wrong or false appraisals, national or international subdivision application or subdivision sales defects, defective underwriting and reselling, holder-in-due-course failures by the lenders and their assignees and their collection arms, bait-and-switch loan-slamming, 100% loans lender-disguised and booked as “equity transactions” through 80/20 and 70/30 dual loans in violation of both warehousing and secondary market underwriting rules, contractual and tortuous bad faith, violation of a lender’s own internal or Regulator-required standards, process and rules, dealings with the primary borrowers that void guarantees, and, especially in commercial settings, the debt being secured by a defective property or proforma for the property, inappropriate or negligent proprietarily involvement by the lender or its agents in the property, waste by the lender in possession, failure to follow mitigation duties or laws and other defenses among the multiple other contract and tort defenses such as outright statutory or consumer fraud, common law fraud, unlawful collection practices, racketeering and others. The parties need to consult their attorneys for these as they vary with each fact and transaction pattern.