Homeowners gain bargaining room

Reports of flawed foreclosures continue to roll in. Propublica, which is a nonprofit independent news organization, reported in May that federal regulators and two states, California and Illinois, pointed their legal arrows at Lender Processing Services, which helped to handle more than half of all mortgages nationwide. LPS allegedly was involved in the robo-signing of mortgage documents, which means that a person signed and notarized the papers without reviewing them for accuracy. In other words, consumers might not be in hot water had employees performed their jobs as the public expected.

That’s all the more reason for you to keep detailed records of mortgage payments, such as when checks were written, received and cashed. You will need to be able to prove that you have never been delinquent in your payments and paid the correct amount if you end up suing the bank.

Today’s favorable political climate might leave courts inclined to believe that that foreclosure paperwork in any given case is faulty, says Kella McCaskill, who is founder of Community Housing Assistance Services. If you have your evidence pinned down, you might be in a position to get a positive outcome from the bank without going to court. The bank might seek to avoid legal fees or risk an adverse ruling by agreeing to stop foreclosure proceedings and modify your mortgage, McCaskill says.