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Understanding Wrongful Foreclosure: Your Rights and Remedies
Published June 23, 2026 · 5 min read
Published June 23, 2026 · 5 min read
Wrongful foreclosure occurs when a lender or servicer forecloses on a property in violation of the law or the mortgage contract. It's not just unfair — it's illegal. And homeowners have powerful remedies, including setting aside the sale, recovering damages, and in some cases, punitive damages against the servicer. At Dream Financial Management, we help identify wrongful foreclosure claims and connect homeowners with the legal resources they need.
The servicer simultaneously pursues foreclosure and a loss mitigation application. Illegal under CFPB rules if you submitted a complete application 37+ days before the sale.
The party foreclosing doesn't actually own the loan or hold the promissory note. Robo-signing, improper assignments, and broken chains of title are common defects.
Failure to properly serve the notice of sale, improper publication, or foreclosure despite an active bankruptcy stay.
Foreclosing for the wrong amount — inflated fees, misapplied payments, or including amounts you don't actually owe. A loan audit can prove this.
The court voids the foreclosure. You get your home back. Requires strong evidence of illegality.
Compensation for financial losses — lost equity, moving costs, emotional distress. TILA provides statutory damages of $400-$4,000 per violation.
In cases of egregious servicer misconduct, courts may award punitive damages as punishment and deterrence.
Many consumer protection statutes (RESPA, TILA) allow recovery of attorney's fees if you prevail.
For a deeper dive, see our comprehensive wrongful foreclosure guide covering all 8 legal grounds in detail.
We'll review your case, identify violations, and connect you with experienced foreclosure defense attorneys.