You obtained a home loan – maybe several years ago. You are suspicious that something wasn’t right about that deal. Maybe you’re living in your home, paying that mortgage payment every month, and just wondering about it.
Maybe you have an underwater mortgage. Or, maybe you’ve already received a Notice of Acceleration from the lender. Maybe they’ve begun foreclosure proceedings or you’ve already moved out and the bank has taken possession of the home (could’ve already sold it to someone else).
Do you have a legal claim against that lender? Maybe you do.
Loan Fraud, or Predatory Lending, Lawsuits – What Are They?
Under the law, when someone is harmed by the intentional acts of another, then the wrongdoer can be held to pay not just for the actual harm he/she/it has caused, but the law also allows for “punitive” damages — the law allows for additional awards of money to be given to the victim as a “punishment” as well as an example that this behavior is wrong and not to be tolerated in our society. These laws, based upon intentional wrongdoing, are called “torts.”
In Florida, banks (as well as mortgage servicers, appraisers, and others) can be liable under tort law for committing fraud or negligence on their customers. Loan fraud is wrong, and victims can sue for it.
Predatory lending is one big example of loan fraud that is commonplace in Florida today. In fact, a study released last week by the Center for Responsible Lending and discussed in the Huffington Post confirms that predatory lending remains “a part of mainstream American banking.”
The Definition of Predatory Lending
Predatory lending has been defined by the federal government as wrongdoing by lenders, mortgage brokers, real estate appraisers, or home improvement contractors who:
- Sell properties for much more than they are worth using false appraisals.
- Encourage borrowers to lie about their income, expenses, or cash available for down payments in order to get a loan.
- Knowingly lend more money than a borrower can afford to repay.
- Charge high interest rates to borrowers based on their race or national origin and not on their credit history.
- Charge fees for unnecessary or nonexistent products and services.
- Pressure borrowers to accept higher-risk loans such as balloon loans, interest only payments, and steep pre-payment penalties.
- Target vulnerable borrowers to cash-out refinances offers when they know borrowers are in need of cash due to medical, unemployment or debt problems.
- “Strip” homeowners’ equity from their homes by convincing them to refinance again and again when there is no benefit to the borrower.
- Use high pressure sales tactics to sell home improvements and then finance them at high interest rates.
Banks Have a Fiduciary Duty to Their Borrowers Which Many Have Ignored in Loan Fraud
The law recognizes that banks and mortgage lenders have a special, unique relationship with their customers, and legally this means that these borrowers are owed a special duty of care, a “fiduciary duty” by these institutions to do the right thing. When a borrower relies on the lender – through its underwriting process – to figure out if the borrower can really afford the home, through investigation of the borrower’s income and credit rating, then the lender has a duty to make sure that the borrower can truly afford to take out that home loan.
The problem in the past few years is that greedy lenders have ignored industry underwriting standards and had a flippant attitude when they investigated the potential loan, and many loans were approved that were based on fraud.
Result? These banks knew or should have known that these home loans and mortgages couldn’t be repaid – they were doomed either because of income, or credit issues, or because the appraisal was bad and the real value of the property is not nearly the value that the appraiser established so the loan fraud could happen.
What To Do If You Are a Possible Victim of Home Loan Fraud
If you believe that you or a loved one have been the victim of Loan Fraud, Negligence or Predatory Lending, then don’t procrastinate. There are deadlines for filing claims (“statutes of limitations”) that apply here, and there are also concerns that the defendant banks, appraisers, mortgage brokers, etc. will still be around to be pay for the damages they’ve created. Act now by contacting a Florida real estate loan fraud attorney or reviewing the details provided by the Department of Housing and Urban Development today.