A wrongful foreclosure occurs when a lender or servicer violates the law during the foreclosure process — violating dual tracking rules, foreclosing on the wrong property, or ignoring a pending loan modification. Learn how to identify wrongful foreclosure and fight back.
A wrongful foreclosure occurs when a mortgage servicer or lender conducts a foreclosure sale in violation of law, regulation, or contract. This is not about whether you were behind on payments — it's about whether the foreclosure itself was legally proper. Even if you missed payments, the foreclosure may still be wrongful if the servicer violated dual tracking prohibitions, foreclosed despite a pending loss mitigation application, charged incorrect amounts due to servicing errors, or violated state foreclosure procedural requirements.
Wrongful foreclosure claims can result in the sale being set aside (voided), monetary damages, and in some cases, return of the property to the homeowner. At Dream Financial Management, we have helped numerous clients identify wrongful foreclosure elements and pursue appropriate remedies — from post-sale litigation to pre-sale temporary restraining orders that prevent the wrongful sale from occurring in the first place.
Foreclosing while a complete loss mitigation application was pending 37+ days before the sale is a clear RESPA violation and the most common wrongful foreclosure ground. See dual tracking guide.
Unthinkable but it happens — the servicer forecloses on the wrong address, wrong lot, or wrong unit. An immediate preliminary injunction should be sought.
The foreclosure is based on an inflated or incorrect arrears amount. Servicing errors, misapplied payments, and improper fees can create a false default.
If a foreclosure sale occurred during an active bankruptcy automatic stay, the sale is void — not merely voidable. This is one of the strongest wrongful foreclosure claims.
Missing breach letter, NOD, NOS, or other state-required notices. RESPA and state laws specify strict notice requirements.
The foreclosing entity must prove it holds the note and has authority to foreclose. Missing assignments, robo-signed documents, and chain-of-title gaps support standing challenges.
Every state has a statute of limitations for foreclosure. If the lender waited too long after the default, the foreclosure is time-barred. See our defense strategies guide.
If you properly exercised TILA rescission rights and the security interest was terminated, foreclosure thereafter is wrongful. The rescission creates a cloud on title that must be resolved before foreclosure can proceed.
A court order voiding the foreclosure sale and restoring your ownership. Available when the sale was procedurally defective or violated law.
Recovery of lost equity, relocation costs, emotional distress, and in some cases, punitive damages for egregious conduct.
Both RESPA and TILA provide for fee recovery, making meritorious wrongful foreclosure cases economically viable to pursue.
If your servicer foreclosed while your modification was pending, charged incorrect amounts, violated the automatic stay, or failed to follow required procedures — you may have a wrongful foreclosure claim. Time limits apply. Contact us today for a case evaluation.