Most homeowners who experience foreclosure due to a medical disability often suffer from a physical accident or illness. While these are often serious and devastating, and can lead to permanent disabilities, finding out that the borrower is suffering from a mental problem can present more unique challenges. But if a homeowner can be diagnosed as clinically insane, some family members may be tempted to try and have the original mortgage declared void now that it is in foreclosure.

It would be somewhat difficult for a homeowner to be declared insane and try to avoid foreclosure that way. Having been declared insane sometime after the original mortgage contract was signed, in fact, would typically have no effect on the mortgage company being able to declare foreclosure on the house. Insanity after the fact is not sufficient to have any kind of foreclosure proceedings dismissed, although the process may be drawn out or the family members taking care of the situation given more leeway by the courts to find a solution.

However, if the borrower was insane at the time of signing the original mortgage contract, then it may be possible to have it declared void, if the lender had cause to worry about the borrower’s ability to enter into a contract in the first place. Having a legal and mental capacity to enter into a contract is a necessary element of signing for a mortgage. If the homeowner was mentally incapable of entering into a contract at the time the loan closed, then it may be possible to get out of the mortgage, although still somewhat unlikely.
Even this, though, would be somewhat difficult to prove in an actual court, even with expert witnesses. People who take out mortgages have to sign numerous disclosures indicating that they understand the documents they are signing and that they are legally able to enter into a contract. If the borrower had a good job with stable income and could produce income documents showing a decent financial position over a period of years, then it may be difficult to argue for that person’s insanity at the time of signing for the mortgage.

In general, people who can be declared clinically insane and are manifesting the condition at the time they are applying for a mortgage are usually incapable of showing the stable economic conditions that would pass the guidelines for being loaned a significant amount of money. Proving later on, once the homeowner has fallen behind on the mortgage, that he was incapable of entering into the contract due to insanity may seem like a shaky case to the courts. The attorneys for the bank will, of course, do their very best to attack these arguments and move ahead with the foreclosure process and sheriff sale.
Such issues should be taken care of as soon as possible, preferably before the homeowner has fallen behind or at least before the bank has filed the foreclosure lawsuit in court. Family members who may be caring for the newly declared insane borrower should take the mental state of the person into consideration when trying to help stop foreclosure. But if they are unable to show that the borrower was suffering from the mental defect at the time of the original mortgage, then having the contract voided will most likely be impossible.

Discovering that a family member or close associate is suffering from a clinically-diagnosable mental disability can be one of the most challenging experiences of one’s life. Helping the borrower through present financial difficulties will also present numerous unique challenges, including the loss of a house to foreclosure. Unfortunately, simply knowing that a homeowner has become insane since the time of entering into the mortgage does not guarantee that the contract can be voided now that the payments have fallen behind.