Lender Sues Borrower for Loan Fraud
As a mediator who offers alternative dispute resolution, or mediation, I’m preparing an upcoming mediation that involves a lender going after the borrower for loan fraud. The law suit has been filed and I was chosen by the California Superior Court to act as a mediator.
The attorney representing the bank wants $80,000 in damages and is asking for the court to award punitive damages. The borrower denies the loan fraud and states that they completed the loan application in good faith without making false statements. The borrower provided tax returns, financial statements, and was approved for the loan.
We all read about the amount of foreclosures that are occurring. We have read about lenders going through with foreclosures and not being prudent in the foreclosure process such as robo signing.
Is this law suit a new trend?
As a mediator, it is clear from this dispute that there are two strong positions. How does one compromise when the home may be lost in foreclosure and the buyer has few assets?
What is the cost of a trial if a settlement does not occur? What about delays of five years in civil disputes due to California’s present budget. I’m confident that mediation will be kinder to the parties, versus continued litigation and in this case trial has been set for April 2012. I look forward to acting as the neutral in this dispute and working with the attorneys involved in the suit. I’m confident that mediation can play a large role towards a settlement.
by Jim Hildreth
| Email Jim Hildreth | 08.24.2011 
Reader Comments (3)
Hello my name is Erica Rich and am being for something a loan plac did ok i had went online trying to get approve for a loan and when i did they said i was preapprove but i have to get a match for a lender so they did the match and it told me to fill out the application and i did now am gettin sue because they said i did a scam how? and what can i do
Hello my name is Erica Rich and the reason for this email is because i need a lawyer for a case yesterday the date was 10-29-11 and i got a phone call from a lawyer in california and they said ez usa has a lawsuit agaisnt me and i dont know why when i applyed for a loan on line they said i was preaproved and they had to match me up with a leander. so when they did that they all ready had my infor had my infor so now they said i was doin a fraud and a scam please help me cause i didnt do anything wrong in N.C. And i have a statement saying that they didnt depoit anything in my account please I need to know what i can do please
Is this the first time that a lender sues a borrower for loan fraud? To my knowledge, a lender can only sue a borrower in a federal court when the borrower fails to pay, but not because of fraud. Can you provide more details about the lawsuit? Thanks.