Losing your home can be a devastating experience. However, being late on mortgage payments does not give a lending company the automatic right to take your property -- the matter must first go through a court process known as foreclosure. If you have received notice that a foreclosure action has been filed, you will need to follow the rules on how to respond spelled out in your state’s laws.
A foreclosure action is a legal process by a lender regarding a mortgage loan on real estate. Specifically, the lender is asking the court to order the sale of your property to satisfy the unpaid loan balance that is currently in default. Foreclosures proceed just like any other civil lawsuit, and they’re governed by procedural court rules under state law. The case typically starts with the lender filing a complaint with the court and then delivering or "serving" you a copy of this document along with a summons.
Under the laws of most states, you are required to respond in writing after you receive the foreclosure paperwork. The document you will use in your response is referred to as an "answer" and it must follow certain formatting guidelines under state law. Some states offer fill-in-the-blank answer forms through the court website or they may be obtained in-person from the court clerk. Specific time limits are usually in place, such as 35 days, for you to file your answer and mail a copy to the lender's attorney. Failure to adhere to the time constraints could result in default. Default means that everything your lender stated in the complaint will be taken as fact by the court, and the company will be awarded everything it requested.
Your answer form needs to provide a response to every line contained in the complaint. Responses generally need to indicate whether you agree with the particular statement, deny it, or do not know whether it is true or false. You will also have space in the answer to note any defenses or counterclaims you may have to the foreclosure. An example of a defense might be that you never had a valid loan contract with the lender. An example of a counterclaim would be if you believe your lender failed to comply with state or federal laws regarding permissible debt collection practices.
Once your answer is filed -- or if you fail to respond in time -- the foreclosure will move forward. In some states, you have the right to request mediation. During this process, a mediator will try to facilitate a resolution between you and the lender that will allow you to keep living in your home. If mediation does not produce an agreement, the case will then proceed through normal litigation and go to trial. Because court rules and procedure can be very complex, you may choose to retain the services of an attorney to help protect your rights if the foreclosure is not resolved in the initial stages.