retaining a Virginia
law firm to help stave off a wrongful foreclosure should keep this useful fact in mind:
your lawyer's job will be a lot easier if you take legal action before the bank forecloses on
your property. Seek legal advice when you begin to fall behind on your mortgage
or when workout negotiations seem to be faltering. Don't wait until the trustee
enforces the deed of trust and kicks you out of the house before going
to an attorney, on the assumption that your smart lawyer will be able to
"undo" an unfair foreclosure. In the vast majority of cases, Virginia
courts will not set the foreclosure aside.
This reality is
aptly illustrated by a recent case out of the United States District Court for
the Eastern District of Virginia, Horvath v. Bank of New York, (E.D. Va. Jan. 29,
2010). The plaintiff, John Horvath, found himself unable to keep up with his
mortgage payments--an unfortunate predicament all too common these days--and
the defendants foreclosed on his house. Mr. Horvath admitted he had fallen
behind on his mortgage, but asserted a number of different legal theories
revolving around the argument that Bank of New York and other companies with an
interest in his mortgage acted improperly and did not adhere to the law when
servicing his mortgage, foreclosing on his house, and eventually evicting him.
The court shot each argument down, one by one, and dismissed the case for
failure to state a legally cognizable claim.
The first count
was for a declaratory judgment declaring the foreclosure "void." The
court ruled that declaratory relief would serve "no useful purpose"
since the foreclosure sale had already taken place. The court noted that
declaratory judgments are reserved for "forward looking actions."
Next, Mr. Horvath
argued that the trustee committed a breach of fiduciary duty when he foreclosed
on the property without conducting "reasonable due diligence." The
court was not persuaded by that angle either, pointing out that Virginia law
does not recognize a duty of due diligence by a trustee on a deed of trust. The
duties of the trustee are limited to those specified in the deed of trust.
Enjoin Wrongful Foreclosure Before It Is Too Late in its
entirety on Virginia Business Litigation Lawyer Blog.