Phony Appraisals
Many fraudulent mortgage transactions start out with the appraiser coming back with an inflated value of the home for which the purchaser seeks to obtain a mortgage. In cases where the purchaser actually couldn’t afford the home to begin with, the mortgages they were offered were mortgages involving negative amortization. Negative amortization refers to a situation where instead of paying down the mortgage, a portion of the interest gets added to principal and the homeowner ends up owing more money than they started out borrowing.
Truth in Lending Law Violations (“TILA”)
The Truth in Lending Law requires banks to abide by a certain ethical code of conduct. Predatory lending is defined under the Truth in Lending Law as any pattern of conduct in which the actual lender is hidden through subterfuge. Violations of the Truth in Lending Law allow the damaged party to recover their attorney’s fees, and treble damages.
When purchasers attend a closing they sign numerous documents. The two most significant documents are the note and the mortgage. The note is an I Owe You. It is documentation that a debt exists. However, the evidence of the existence of the debt is subject to being rebutted. The mortgage creates a lien pursuant to a written contract. The contract is a contract to enforce the note. If the note is invalid, is unenforceable or can be rebutted, in theory, the mortgage should be able to be set aside. Unfortunately, the courts in New York currently do not see things this way.
