Mortgage Fraud Victims: Foreclosure Defense for Fraudulent Loans

Mortgage fraud isn't just a criminal matter — it's also a powerful civil defense to foreclosure. If your loan was originated through fraud — whether by the broker, loan officer, appraiser, or lender — the fraud may give you grounds to challenge the foreclosure and bring affirmative claims for damages. Common types of mortgage fraud that can support foreclosure defense include: predatory lending, inflated appraisals, forged documents, undisclosed fees, misrepresented loan terms, and loan flipping (repeated refinancing without net benefit).

Predatory lending — where borrowers are steered into loans they can't afford, with unfavorable terms, based on the lender's economic interest rather than the borrower's ability to repay — was widespread in the years leading up to the 2008 financial crisis. Today, claims can be brought under state unfair and deceptive acts and practices (UDAP) statutes, the federal Truth in Lending Act (TILA), and the Home Ownership and Equity Protection Act (HOEPA) for high-cost loans. These claims can provide rescission rights, statutory damages, and attorney's fees.