Can You Sue For Mortgage Fraud

The real estate market has changed so much that the days of easy mortgage lending seem like ancient history to most people. Yet it was only a few years ago when just about anybody could get just about any mortgage. People in the mortgage industry came up with a code word for the worst mortgages: "ninja loans." Ninja didn't mean "Japanese warrior," but rather was an acronym for "no income, no job or assets."

As we all know, the boom led to a terrible bust when millions of homeowners found themselves unable to make the payments on their mortgages. The defaults led to foreclosures and forced sales, throwing countless properties onto the market. The glut depressed prices, leading to negative equity situations. This made it impossible for strapped homeowners to refinance their way out of the jam, leading to even more foreclosures. A vicious cycle was set in motion that continues to this day.

If you got caught up in the real estate bust, you may be understandably angry at the Realtors, mortgage brokers, and others who "helped" you into the mess you're in. You may feel that they're to blame for your predicament. You may be right. But you also may be wrong.

The mere fact that your house has gone down in value, or that you can't afford your mortgage payments, does not constitute fraud on the part of those who put your purchase deal together. The ability of people to utilize the marketplace to make decisions as they see fit is one of the cornerstones of our free market economy. You're free to buy an asset (like a home). You may reap the benefits of an increase in value. You also may suffer the pain of a decrease. Similarly, you are free to use credit either wisely or unwisely. Put another way, you're the captain of your own financial ship. It's up to you whether you pilot the ship skillfully, or run it aground.

The rule of "let the buyer beware" does not, however, give sellers and lenders a free hand to defraud you. If someone has misled you, taken unfair advantage of you, or defrauded you, you can sue them and may well prevail in court. So where do you draw the line?

As a general rule, the big question is whether or not a lender, Realtor, or other person intentionally misled you and/or abused a relationship of trust. If you sue, the burden of proof will be on you. If you're thinking of filing a lawsuit, you would be well advised to consult a competent attorney. Gather all the information you can and show it to your attorney. He or she will then be able to advise you where you stand. You may have a case against your lender or real estate agent. But then again, you may have nothing more than a case of bad luck. Rather than letting your emotions decide that question, you're better off letting an attorney judge the merits of your case.

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