A foreclosure can occur when homeowners fall behind in their mortgage payments due to unemployment or unexpected expenses. The following account shows how improper lending practices can cause real estate issues to become even worse.
A judge has ruled that mortgage lenders, including Citigroup, JPMorgan Chase and Wells Fargo, will need to face claims filed by the Massachusetts attorney general regarding these lenders' foreclosure practices. The Superior Court in Suffolk County issued the decision on Nov. 30.
The state attorney general also sued these three banks in addition to GMAC Mortgage and Bank of America last year. Some of these claims were included in a $25 billion settlement reached between banks and 49 states earlier in the year. The attorney general accused these lenders of using documents containing fraudulent information to illegally foreclose on homes. She added that these practices misrepresented loan modifications and undermined records on public land.
The attorney general stated that the fraudulent documents caused the banks to initiate foreclosure proceedings on homes before they actually held the mortgage to those homes. The court also ruled that a similar claim against Bank of America could not proceed since the attorney general did not identify a specific instance in which this bank foreclosed on a home without holding the mortgage.
Common issues in real estate law include foreclosures, loan modifications and refinancing mortgages. Legal strategies in these cases include declaring bankruptcy and obtaining more favorable terms.
Source: Bloomberg Business Week, "JPMorgan, Citi Must Face Massachusetts Foreclosure Claims," David McLaughlin, Dec. 3, 2012