Written by attorney Christina L. Geraci

The Delaying Game: Steps Lenders Can Take to Stop Borrower Stalling Tactics

We are in court weekly opposing ex parte temporary restraining orders and preliminary injunctions. It has become infamous in today’s real estate market as the borrower’s last attempt to retain possession before filing a justified or, in many cases, an unjustified bankruptcy.

It starts with the initial contact from the borrower wanting or demanding a loan modification. However, the lender is usually well informed about their borrower’s paying capabilities and aware that a loan modification is a temporary fix. Thus, even if a loan modification is implemented it ultimately ends in foreclosure anyway. In an attempt to appease their borrowers, lenders agree to a loan modification—a temporary fix—and end up right back in court four to five months later.

The borrower game to halt foreclosure generally proceeds as followers: 1) Ex Parte Hearing for a Temporary Restraining Order; 2) Preliminary Injunction; and ultimately, 3) Bankruptcy.

This article will discuss the various defenses conventional and private lenders can utilize to overcome the excessive, burdensome, and costly task of defending against borrower suits. Unfortunately, the downward spiral of the economy has left many judges making it their personal goal to halt foreclosures. We have seen a swift change of climate in the court system. Many judges are borrower friendly and lender adverse. However, that does not mean they can re-write the law. With the well equipped and experienced litigators at our firm, we have been successful at combating even the toughest of cases and Judges.

The Temporary Restraining Order Stage

Usually, the first step a borrower takes in preventing a foreclosure is filling a temporary restraining order (TRO). A TRO is an order by the court that prevents a lender from foreclosing on the subject property for a limited period of time; usually only a few weeks. A TRO will stay in effect until a formal hearing on a preliminary injunction is heard. During this time, the lender will usually postpone the sale to a date on or after the preliminary injunction hearing.

We always attempt to respond to a request for a TRO at the ex parte hearing, but courts almost always grant TROs. To obtain a TRO, the requesting party need only show 1) irreparable harm will occur should the sale proceed; and 2) a likelihood of success on the merits of that case. In the past, judges seriously considered whether plaintiff’s claims had merit and ruled on those issues, but now, more and more error on the side of caution (and let us be honest—they want to prevent homeowners from being tossed out of their homes), judges grant the TRO. Once the TRO is granted, a hearing on whether a preliminary injunction should be ordered is immediately set.

The Preliminary Injunction Stage

A preliminary injunction, if ordered, prevents the lender from going to foreclosure sale until a final ruling on the merits of the case is decided, which can be several months to several years. It is also at this stage that we can effectively end the litigation with a little luck. The law states that plaintiff must post an undertaking to proceed with litigation unless they are indigent. If lenders demand a reasonable undertaking (usually the amount arrears, cost of unsecured equity, prospective attorney fees, and costs of litigation) the court should, and does, grant the request. Borrowers claiming they are indigent would be futile due to the nature of the case.

When the court orders the undertaking, the borrower must deposit with the court the ordered amount or post a bond in the amount ordered. More often than not, the borrower is unable to deposit the funds, because if they had the funds they would be making their payments, and they are usually unable to obtain a bond. It is rare for a borrower to procure a bond; bonds are expensive, require sufficient security, and are difficult to post with the court.

When borrowers fail to post the requisite undertaking by the date specified by the court, the preliminary injunction can be dissolved by request and the lender may proceed with the foreclosure sale. Of course, if the undertaking is posted, it allows the lender peace of mind in knowing that at the conclusion of the suite their financial interests will be protected.

Once the preliminary injunction is dissolved the last and final option available to the borrower to prevent foreclosure is bankruptcy.


At this point there are multiple issues that can be addressed when bankruptcy is discussed because it is such a broad area of law. For the purposes of this article we will keep it simple. If you have specific questions regarding specific situations, please give us a call to discuss your case. There may be other option available to you that are not discussed below.

Once a bankruptcy is filed, an automatic stay is imputed as to any proceedings against the borrower; with an exception of criminal proceedings. Essentially, no collections against the borrower may be taken, including any type of repossession or foreclosure. The caveat is, the borrower must pay all post-petition payments due the lender. All payments subject to the loan agreement from the date the bankruptcy is filed must be submitted to the lender. Depending on the type of bankruptcy filed (Chapter 7 or Chapter 13) this may be subject to court review for a six month to a three year period. During this time the borrower must make their monthly payments. If the borrower fails to pay the mortgage payments, a motion for relief from the automatic stay may be granted and the lender may proceed to foreclosure.


TROs are usually granted because Judges are reluctant to deny at the TRO stage. Do not be too alarmed as the TRO lasts for a very limited time period (only a few weeks). But, there is some light at the end of the tunnel. We almost always lose the TRO battle, but at the preliminary injunction stage if we are victorious in persuading the judge to issue a ‘reasonable’ bond we are having great success at repealing the preliminary injunctions.

Preliminary injunctions are combated by a demand for a reasonable undertaking. If not posed, the preliminary injunction can be dissolved.

Bankruptcy will only defer foreclosure, but if borrowers do not make their post-petition payments a relief from automatic stay may be requested so foreclosure may go forward.

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