A California company, Lead Police, has taken it upon themselves to police the ever treacherous ‘lead aggregation’ industry. Nice to see someone pro-actively attempt to right some of the wrongs that go on within the mortgage industry.

Supply is way up, demand is way down, so lawsuits and their respective settlements have become the rage of the mortgage industries right now. It’s dog eat dog world, and the David’s are eating up the Goliath’s. The fact that actual case law rulings decided in front of judge and jury may not reflect this should not be interpreted as lack of sufficient evidence to convict, but rather as the reluctance of the perpetrators to ‘go the distance’ and test these waters, instead choosing to settle out of court. In fact there has been a sharp rise in settlements via lawsuits, class-action and individual, due to improper disclosure methods used during all points of the mortgage transaction.

Actual amounts are reaching the multi-million dollar levels. This trend can be seen from the top down as Bankrate.com, Ameriquest Mortgage, CWBC, and other mortgage service providers are settling instead of going to trial for material misrepresentations that could be construed as a type of fraud in a court of law, in which case a guilty party would likely have to pay trebled damages in the order of billions of dollars.

Fraud. the intentional use of deceit, a trick or some dishonest means to deprive another of his/her/its money, property or a legal right. A party who has lost something due to fraud is entitled to file a lawsuit for damages against the party acting fraudulently, and the damages may include punitive damages as a punishment or public example due to the malicious nature of the fraud. Quite often there are several persons involved in a scheme to commit fraud and each and all may be liable for the total damages. Inherent in fraud is an unjust advantage over another which injures that person or entity.

Constructive fraud: when the circumstances show that someone’s actions give him/her an unfair advantage over another by unfair means (lying or not telling), the court may decide from the methods used and the result that it should treat the situation as if there was actual fraud even if all the technical elements of fraud have not been proven.

Defraud: to use deceit, falsehoods or trickery to obtain money, an object, rights or anything of value belonging to another.

I see liability in current mortgage broker/bankers actions, non-actions, disclosures, and non-disclosures…whether intended or not. Specifically where, how, and why is the subject of a (near) future post.

Sh*t runs down hill. It is a only matter of time before one of these complaints blows up into a class action suit that won’t accept settlement. Are small to medium sized shops impervious at their level? They’re a cross-claim away from potential extinction. I see liability in current mortgage broker/bankers actions, non-actions, disclosures, non-disclosures, and overall practices…whether intended or not.

Cavalier attitudes regarding what one has practiced in the industry ‘for years’ with perceived impunity (listen up mortgage bankers), may be in for a rude awakening.