Posted by kevin on June 21, 2011 under Foreclosure Blog | Comments are off for this article

In New Jersey, there are two approaches to fighting foreclosures in court.  The first approach is the procedural approach.  That boils down to whether the lender can prove standing and has complied with the Fair Foreclosure Act.  The second is to reduce the amount due on the mortgage loan because of violations of the law.  Usually, the violations are for common law predatory lending or violations of the Truth in Lending Act.

One area that I am looking into is the effect of the loan on the borrower’s credit rating.  We are bombarded by advertisements which tell us that a good FICO score (700+) has value.  It allows us to get credit and tells us what we are going to pay for that credit.

Clearly, if you signed on for a mortgage loan that you could not afford to pay, that is the basis for a predatory lending claim.  When you fail to make payments, the first thing that happens is not that you get hit with a foreclosure complaint.  That takes time.  The first thing that happens when you miss a payment is that the servicer or lender reports you to the credit reporting companies.  Then, your FICO score takes a hit.

If your credit rating has a value and a lender contributes to the destruction of your credit score, then that contribution should be an element of your damages.  The problem as I see it, however, is how do you quantify that damage?  You are going to need an economist or acutuary or some other type of expert which can put a dollar value on, say, a 300 point drop on a FICO score.

Right now, I am looking into this area of damages.  If anyone out there is an expert in this area, or knows of one, please respond.

The key to this practice is to keep pressure on the servicer/lender.   My experience is that they are slow to adjust, however.  So, this can be a fertile area of the law concerning damages in a foreclosure action.

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