LENDER’S FRAUD AND BREACH OF CONTRACT
A property owner may become involved in disputes with a lender, lender’s broker, or a third party claiming to be a lender. The action may be filed for their fraud, for breach of contract, or for damages caused as the result of their negligence.
Lender’s Fraud
Fraud by the lender, or by someone claiming to be a lender, gives the property owner the right to file an action against the parties. Example of fraud by the lender is for promise to give a loan to the borrower, to refinancing the loan at certain terms for the borrower, or to modify the existing loan when the lender changes the terms of the loan at the close of escrow.
Fraud may also be committed by a party claiming to be a lender for obtaining the property owner's signature on documents unrelated to a loan.
The borrower may seek for damaged for different acts of the lender. The lawsuit may be filed when the lender commits itself to give the loan, when the loan documents are signed, during the terms of loan, when the lender intends to foreclose on the borrower’s property, or when the lender has foreclosed on the borrower’s property.
The lender may also be liable to the borrower for the predatory lending by the lender.
In addition to seeking for damages for fraud, the borrower may seek for temporary restraining order and injunction against the lender, and prevent foreclose of his or her property by the lender.
California recognizes two types of fraud. The first type is the actual fraud. To obtain damages for actual fraud by the lender, or party claiming to be a lender, the borrower must prove the followings:
1. Misrepresentation of facts to the borrower;
2. With the knowledge of falsity of facts by the lender;
3. Information is given to the borrower with the intent to defraud him or her;
4. Justifiable reliance on the information by the borrower; and
5. Damages are resulted from the misrepresentation.
The second type of fraud is called “constructive fraud.” The lender commits constructive fraud if it is shown that the lender had a duty toward the borrower or his/her agent, the lender gained an advantage as the result of his/her/its act, and the lender mislead the borrower or his/her agent.
For more information pertaining to fraud, see article on Fraud Litigation.
Lender’s Breach of Contract
A lender may also be liable for damages to the property owner for breach of contract by the lender against the borrower. The borrower has the burden of proof of showing damages as the result of breach of contract by the lender. The borrower may seek for damaged when the lender commits itself to give the loan to property owner and fails to do so. Breach of contract may also incur by the lender when the loan documents are signed, during the terms of loan, when the lender intends to foreclose on the borrower’s property, or when the lender has foreclosed on the borrower’s property.
The most common breach by the lender is for failure of the lender to advance funds after the loan documents are signed by the parties. Other breaches are for violating the duties of good faith and fair dealing in setting charges, wrongful acceleration of loan, failure to give adequate notice for changing the terms of loan, or to foreclose on the property.
In addition to damages for breach of contract, the borrower may seek for temporary restraining order and injunction against the lender, and to prevent foreclose of his or her property by the lender.
As an example, the lender may commit itself to give a loan to the property owner, to commit itself to refinance an existing loan for the property owner, or to modify the existing loan. The law requires that the loan commitment, the refinancing commitment, or the loan modification agreement to be in writing. The property owner may seek for damages against the lender if lender gives a written loan commitment to the property owner, and fails to give the loan, to refinance the owner’s property, or to modify the existing loan based on the terms specified in the loan commitment.
California law requires the contract pertaining to the real property to be in writing (called “Statute of Frauds"). However, the borrower may be entitled to damages if the lender’s promise is oral, the borrower relied on the lender’s promise, and damages resulted to the borrower.
For more information pertaining to breach of contract, see article on Breach of Contract.
Lender’s Negligence
A property owner may also file an action against the lender for its negligence. For example, the lender may require that its own appraiser to determine the value of real property when the owner applies for a loan. The lender would be liable to the borrower if the appraiser has negligently over-appraised or under-appraised the real property, and such over-appraisal or under-appraisal of the property has caused damages to the borrower.
Other Laws Affecting Lenders
Many other state and federal laws affect the lender/borrower relationship. Certain actions may be filed by the borrower against the lender. Other actions may only be filed by the state or federal authorities. In general, the laws applicable to a lender are as follows:
1. Environmental hazards (affects commercial properties only).
2. Securities laws.
3. Antitrust laws.
4. Bankruptcy laws.
5. Truth in lending laws.
6. Loan settlement fees and procedures laws.
7. Equal credit opportunities laws.
8. Elder abuse laws.
9. Civil rights laws.
10. Tax laws.
11. Labor laws.
12. Commercial Code requirements to act in good faith.
13. Federal and state debt collection laws.
14. California consumer loan protection laws.
15. California consumer legal remedies act.
16. Statutory and common law translation requirements (affects borrows with English as second language).
17. Consumer Credit Reporting Agencies Act.
18. California fair housing laws.
19. California Residential Mortgage Lending Act.
20. Racketeer Influenced and Corruption Organization Act (RICO).
21. Usury laws.
For more information call us at (310)553-5562.
A property owner may become involved in disputes with a lender, lender’s broker, or a third party claiming to be a lender. The action may be filed for their fraud, for breach of contract, or for damages caused as the result of their negligence.
Lender’s Fraud
Fraud by the lender, or by someone claiming to be a lender, gives the property owner the right to file an action against the parties. Example of fraud by the lender is for promise to give a loan to the borrower, to refinancing the loan at certain terms for the borrower, or to modify the existing loan when the lender changes the terms of the loan at the close of escrow.
Fraud may also be committed by a party claiming to be a lender for obtaining the property owner's signature on documents unrelated to a loan.
The borrower may seek for damaged for different acts of the lender. The lawsuit may be filed when the lender commits itself to give the loan, when the loan documents are signed, during the terms of loan, when the lender intends to foreclose on the borrower’s property, or when the lender has foreclosed on the borrower’s property.
The lender may also be liable to the borrower for the predatory lending by the lender.
In addition to seeking for damages for fraud, the borrower may seek for temporary restraining order and injunction against the lender, and prevent foreclose of his or her property by the lender.
California recognizes two types of fraud. The first type is the actual fraud. To obtain damages for actual fraud by the lender, or party claiming to be a lender, the borrower must prove the followings:
1. Misrepresentation of facts to the borrower;
2. With the knowledge of falsity of facts by the lender;
3. Information is given to the borrower with the intent to defraud him or her;
4. Justifiable reliance on the information by the borrower; and
5. Damages are resulted from the misrepresentation.
The second type of fraud is called “constructive fraud.” The lender commits constructive fraud if it is shown that the lender had a duty toward the borrower or his/her agent, the lender gained an advantage as the result of his/her/its act, and the lender mislead the borrower or his/her agent.
For more information pertaining to fraud, see article on Fraud Litigation.
Lender’s Breach of Contract
A lender may also be liable for damages to the property owner for breach of contract by the lender against the borrower. The borrower has the burden of proof of showing damages as the result of breach of contract by the lender. The borrower may seek for damaged when the lender commits itself to give the loan to property owner and fails to do so. Breach of contract may also incur by the lender when the loan documents are signed, during the terms of loan, when the lender intends to foreclose on the borrower’s property, or when the lender has foreclosed on the borrower’s property.
The most common breach by the lender is for failure of the lender to advance funds after the loan documents are signed by the parties. Other breaches are for violating the duties of good faith and fair dealing in setting charges, wrongful acceleration of loan, failure to give adequate notice for changing the terms of loan, or to foreclose on the property.
In addition to damages for breach of contract, the borrower may seek for temporary restraining order and injunction against the lender, and to prevent foreclose of his or her property by the lender.
As an example, the lender may commit itself to give a loan to the property owner, to commit itself to refinance an existing loan for the property owner, or to modify the existing loan. The law requires that the loan commitment, the refinancing commitment, or the loan modification agreement to be in writing. The property owner may seek for damages against the lender if lender gives a written loan commitment to the property owner, and fails to give the loan, to refinance the owner’s property, or to modify the existing loan based on the terms specified in the loan commitment.
California law requires the contract pertaining to the real property to be in writing (called “Statute of Frauds"). However, the borrower may be entitled to damages if the lender’s promise is oral, the borrower relied on the lender’s promise, and damages resulted to the borrower.
For more information pertaining to breach of contract, see article on Breach of Contract.
Lender’s Negligence
A property owner may also file an action against the lender for its negligence. For example, the lender may require that its own appraiser to determine the value of real property when the owner applies for a loan. The lender would be liable to the borrower if the appraiser has negligently over-appraised or under-appraised the real property, and such over-appraisal or under-appraisal of the property has caused damages to the borrower.
Other Laws Affecting Lenders
Many other state and federal laws affect the lender/borrower relationship. Certain actions may be filed by the borrower against the lender. Other actions may only be filed by the state or federal authorities. In general, the laws applicable to a lender are as follows:
1. Environmental hazards (affects commercial properties only).
2. Securities laws.
3. Antitrust laws.
4. Bankruptcy laws.
5. Truth in lending laws.
6. Loan settlement fees and procedures laws.
7. Equal credit opportunities laws.
8. Elder abuse laws.
9. Civil rights laws.
10. Tax laws.
11. Labor laws.
12. Commercial Code requirements to act in good faith.
13. Federal and state debt collection laws.
14. California consumer loan protection laws.
15. California consumer legal remedies act.
16. Statutory and common law translation requirements (affects borrows with English as second language).
17. Consumer Credit Reporting Agencies Act.
18. California fair housing laws.
19. California Residential Mortgage Lending Act.
20. Racketeer Influenced and Corruption Organization Act (RICO).
21. Usury laws.
For more information call us at (310)553-5562.
