Mortgage Fraud:

With the collapse of significant companies in the mortgage and finance industry, the rampant fraud that many builders, developers, banks, and finance companies engaged in is now coming to light. Homeowners were provided with inappropriate mortgages and misled about the terms of their mortgages. Even before the mortgage crisis hit, KO&L attorneys were prosecuting cases on behalf of defrauded borrowers and have recovered millions of dollars for their clients.

Some of the “red flags” of mortgage fraud include the following:
• newly constructed housing developments with home sales for little money down
• multiple mortgage refinances with high fees
• home repair schemes involving mortgage financing
• mortgage financing of debt consolidation
• HOEPA loans (Home Ownership and Equity Protection Act, 15 U.S.C. § 1639 and 12 C.F.R. §§ 226.31-34, covering loans with interest rate at least 8% over treasury securities yield for loans made after 10/1/02, 10% for earlier loans; and loans with points and fees in excess of 8% of total loan amount)
• credit life and/or disability insurance sold with mortgage loan
• fees paid to a mortgage broker the borrower never met
• Interest-only loans which require the borrower to make the interest portion of the payment only. The loan payments are generally interest-only for a specified introductory period. At the end of the introductory period, the payment is raised to the fully amortized interest rate, resulting in a new payment after the introductory period expires that is larger than the payment would have been had it been fully amortizing at the outset
• Pay-option adjustable rate loans which provide the borrower with the “option” to make monthly loan repayments of: (i) principal and interest; (ii) only the monthly interest accrued on the loan; or (iii) a fraction of the monthly interest accrued on the loan. If the borrower elects to make the minimum required monthly payment, the difference between the monthly interest accrued and the loan payment (e.g., a portion of the interest accrued) is added to the remaining outstanding principal loan balance, causing the principal to increase so that borrowers owe more than the borrower owes more than he did when he took theoriginal principal loan amount.
• “stated-income” or “no-document” loans, where you were not asked to provide evidence of your income or ability to pay in connection with the loan application
• undisclosed or excessive charges for title insurance

If you believe you are a victim of mortgage fraud, click here to send us your information.