Fighting to Save Your Home? Watch What You Sign

Thousands of Americans are still in the grips of the nationwide foreclosure crisis. Although foreclosure may seem all but inescapable for many struggling homeowners, there are a number of legal tools available that can potentially help keep families in their homes. But, a disturbing new trend among lenders has some unknowingly signing away their right to fight foreclosure.

Banks Backing Homeowners Into a Corner

Mortgage providers can incur substantial court costs any time a homeowner challenges foreclosure proceedings in court. Of course, banks and other lenders would prefer to avoid these expenses. However, a number of large mortgage providers have recently been exploiting homeowners in a vulnerable situation in order to do so.

A growing number of financial institutions have been offering financial breaks on mortgages in return for a full waiver of the right to challenge any aspect of the loan in court. For homeowners struggling to make payments, this can seem like a golden opportunity. Oftentimes though, rather than helping individuals save their homes, the arrangement leaves homeowners with no options should they get behind again.

Questionable Practices

Once widely utilized in the mortgage industry, these "waiver clauses" were all but eliminated by the federal mortgage modification program that went into effect in 2009, which banned them outright for mortgage modifications facilitated by the government. Individual states have also started to enact laws prohibiting waiver clauses. Yet despite regulations, waiver clauses are increasingly creeping into mortgage agreements, with some lenders claiming they are legally taking advantages of loopholes in the law.

Possible Tests in Court

Considering the regulatory crusade against waiver clauses and the fact that some are included in fine print that many borrowers do not read or understand, it is likely that future lawsuits will challenge the validity of these agreements.

In the meantime, you should be cautious about signing any document that may limit your ability to stay in your home. If your lender offers you mortgage relief, read all provisions of the agreement carefully and contact an attorney for advice.