by Marco Angioni II

Created on: March 14, 2011   Last Updated: March 16, 2011

The possible remedies or defenses available to a debtor when facing a foreclosure first depends on whether the property to be foreclosed is the debtor's primary residence or an investment property. Additionally, both state and federal law can provide remedies, defenses, and even alternatives to a debtor facing foreclosure. -Notice- Most states require specific notice requirements. These state laws require lenders to provide debtors with specific notices containing specific language. For example, some states require lenders to provide debtors with a default notice before the lender can initiate foreclosure proceedings. As another example, some states require that lenders inform debtors of all of their rights, as well as provide contact information to credit counselors or other institutions that could help the debtor resolve his/her financial problems. It is extremely important for a lender to provide the debtor with the required notices because if the lender does not, the debtor could defend against the foreclosure action by arguing that he/she did not receive the proper notice required by law. If a lender fails to give proper notice, the lender may be delayed or even prevented from foreclosing on the debtor's property. -One Action Rule- When a lender loans money to a borrower to purchase real estate, most of the time the loan is "secured" by the real estate purchased. "Secured" means that the property serves as the collateral or "security" for the loan, and should the borrower/debtor default, the lender can take the collateral/security back. For real estate, taking back security is called a "foreclosure." As another example, if a debtor failed to make his/her car payments, the car would be "repossessed" - a "foreclosure" is like a repossession of the borrower/debtor's real estate. Some states have laws that require a lender to pursue the security (and not the debtor personally) in the event a debtor defaults on the loan. If you live in a state with such a law and the lender sues you (the debtor) instead of pursuing the security, the lender may have waived its rights to the security or lost the security. In other words, a lender may be prevented from foreclosing on your home. As such, if a lender violates a state's one action rule, the debtor would have a defense if the lender tried to foreclosure on the debtor's home. A defense based upon the one action rule is complex. As such, you should seek the assistance of legal counsel to discover whether your state

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