Business Litigation Mortgage Lending & Real Estate Fraud

The high volume of real estate transactions and the significant real estate appreciation which has occurred over the past several years has been great for the economy and many individuals and companies have made a great deal of money. Unfortunately, there is a dark side to this prosperity.

Now that the real estate markets are cooling in many areas of the country, more and more loans are going into default and more and more properties are going through the foreclosure process. It is well documented that lenders are finding a great deal of mortgage and real estate fraud as more properties are being foreclosed.

Due to the nature of the real estate industry, once a transaction passes muster in the underwriting process it is unlikely that that fraud will be uncovered unless and until the property is foreclosed.

Once a loan goes into default and the property is foreclosed, "red flags" often arise that might suggest the existance of impropriety related to the transaction. This might include an appraisal review showing that the appraiser used incomparable "comps" or that the appraiser failed to comply with USPAP. Additionally, there may be evidence of improper payments being made out of the closing by the sellers or the closing attorney. A common scenario involving improper payments might be characterized as a "cash out purchase".

Depending on the particular "red flags" found during the review of the loan file, there may be avenues available to you which will allow you to mitigate your losses. Many closing attorneys are covered by E&O insurance policies or their activity may be covered by an ICL. Similarly, appraisers also often carry E&O policies to insure them if they are negligent in their duties. In many states, mortgage brokers are required to post bonds with their respective state which might also provide an avenue for loss mitigation.

Andresen & Arronte is here to help if you have suffered monetary damages due to suspected mortgage fraud. Contace us if you would like to further explore your options for loss mitigation.