Mortgage fraud isn't just committed by borrowers — lenders, brokers, and servicers commit fraud that can form the basis of a powerful foreclosure defense. Learn the types of mortgage fraud, how to identify it, and how to use fraud claims to stop foreclosure and recover damages.
Get Free Case ReviewMortgage fraud falls into two broad categories: fraud for housing (borrower misrepresentation to obtain a loan) and fraud for profit (industry professionals engaging in schemes to extract value). This guide focuses on lender and industry fraud that homeowners can use as a foreclosure defense:
Inflated income, falsified employment, fabricated assets by brokers and loan officers to qualify borrowers for loans they couldn't afford.
Inflated property valuations, use of non-comparable properties, pressure on appraisers to "hit the number" for loan approval.
Misapplication of payments, fabricated fees, force-placed insurance kickbacks, false escrow statements. See: Servicing Errors Guide
Equity stripping, loan flipping, excessive fees, balloon payments targeted at vulnerable borrowers. See: Predatory Lending Guide
Mortgage fraud can be raised as both an affirmative defense and a counterclaim. Common legal theories include:
Unclean Hands Doctrine
Foreclosure is an equitable remedy — meaning the court can deny it based on fairness. If the lender committed fraud in originating or servicing your loan, the court may deny foreclosure under the "unclean hands" doctrine. The lender comes to court with dirty hands and cannot demand equity.
Fraud in your loan origination can be a complete defense to foreclosure. Our forensic loan audit examines your loan documents for fraud indicators and prepares counterclaims for court.