How To Sue For Mortgage Loan Fraud

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Mortgage loan fraud and predatory lending are problems for years. As a consequence, many of us are pressured into getting loans they wouldn’t normally qualify for. you’ll are tricked into removing a high-interest loan, otherwise you may need been sold a house employing a false appraisal. If you’re the victim of real estate loan fraud, then you’ll sue in court.

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What’s Mortgage Fraud?

Fraud in its simplest form is deliberate misrepresentation and deception: One party deceives another by misrepresenting information, facts, and figures. So, mortgage fraud isn’t just predatory lending practices that focus on certain borrowers.

consistent with the Federal Bureau of Investigation (FBI), it’s any kind of “material misstatement, misrepresentation, or omission concerning the property or potential mortgage relied on by an underwriter or lender to fund, purchase, or insure a loan. With this working definition, we see that mortgage fraud are often committed by both individual borrowers and industry professionals. and therefore the sums involved are high. for instance , in Sacramento, Calif., seven people were convicted during a $10 million mortgage scam in early 2019.

Why Commit Mortgage Fraud?

Borrowers and professionals are motivated to commit mortgage fraud for several reasons. we will describe most of these reasons by defining two primary types—fraud for housing and fraud for profit. Fraud for housing is committed by borrowers who, often with the help of loan officers or other personnel, misrepresent or omit relevant details about employment and income, debt and credit, or property value and condition with the goal of obtaining or maintaining land ownership. Fraud for profit is committed by industry professionals who misstate, misrepresent, or omit relevant details about their personal or their clients’ employment and income, debt, and credit, or property value and condition with the goal of maximizing profits on a loan transaction.

It is important to notice here that fraud for profit are often committed by any professional within the loan transaction chain, including the builder, land sales agent, loan officer, mortgage broker, credit/debt counselor, land appraiser, property inspector, insurance broker , title company, attorney, and escrow agent. Industry professionals also can add concert, as a network, to defraud underwriters, lenders, and borrowers, and maximize fees and share profits on all mortgage-related services. These actions are motivated either by the will to realize extra sales commissions or just increase an investment position.

Gathering Evidence for Your Lawsuit

Identify illegal lending practices. Generally, mortgage fraud occurs when an establishment or person misleads or deceives you into entering a misguided loan in order that they will make additional profit. The institution or person are often a bank, lender, appraiser, mortgage broker, land broker, or other individual. Common samples of illegal lending practices include:

  • Encouraging you to incorporate false information on your loan application so as to urge a loan.
  • Pressuring you to simply accept high-risk loans, like balloon loans or those with interest-only payments or steep prepayment penalties.
  • Convincing you to refinance a loan several times and increasing the monthly payment amounts whenever .
  • Charging excessive fees or fees for nonexistent products and services.
  • Asking you to go away signature lines blank.
  • Not providing you with certain statements, like Truth in Lending information, Hud-1 Settlement statements, and straightness Estimates.
  • Using false appraisals to sell properties for quite they’re worth.

Taking State and agency Action

Contact the state’s attorney general’s office. The attorney general is liable for protecting consumers and being the chief attorney for the people of their state. In California, for instance , the attorney general expanded the prosecution of mortgage-related fraud after the debt crisis in 2008. They also established a task force to research these frauds. California also reformed their mortgage and foreclosure system to revive transparency and fairness (The California Homeowner Bill of Rights).

To file a complaint with the attorney general, visit their website and navigate to the complaint form. generally , you’ll got to include information about yourself, the business you’re complaining about, and an evidence of the complaint. Once submitted, the attorney general’s office will review the complaint and respond accordingly.

Filing a Lawsuit

Draft a complaint. you begin a lawsuit by filing a “complaint” in court. within the complaint, you identify the defendant (the mortgage lender, land agent, etc.) and explain the facts that led to the lawsuit. you’ll also request what you would like the judge to try to to (for example offer you money).

  • If you hire a lawyer, then he or she should handle filing the complaint, also as all other aspects of the lawsuit.
  • Many courts now have printed “fill within the blank” forms. These make filing a complaint relatively easy. If you’re representing yourself, then you ought to stop into court and ask the clerk if one is out there . Often, blank complaint forms also are published by the court online.
  • If no form is out there , then you’ll got to draft your own complaint. you’ll see a sample complaint published by a court at you’ll use this as a model as you type up your own complaint.


  • you would possibly be ready to get a jury counting on the facts of your case. If you would like a jury, then you ought to have a lawyer. An experienced attorney will skills to select the jury and present the evidence to a jury during a compelling way. If you’re representing yourself, then you would possibly be more happy with a bench trial where the judge decides the case.
  • You generally cannot get compensation for emotional distress during a fraud lawsuit. However, some courts are more hospitable that sort of claim. you ought to discuss this together with your lawyer.
How To Sue For Mortgage Loan Fraud

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