How to Determine If Your Loan Is Fraudulent

Posted on August 1, 2016 by

Through the 1990s and early 2000s millions upon millions of loans were created. This created some interesting issues for the banks. In some cases, they were looking for ways to cut down on the steps in the process in order to reduce the time it took to process a loan in order to keep up with the flood of business. In some other cases, they were looking for ways to take advantage of the system to bilk homeowners, their investors, and the government out of as much money possible. Unfortunately, the solutions the banks came up with for both of these issues resulted in a system of rampant mortgage fraud that the courts are only now finally catching onto. So how can you determine if your loan or the loan on a prospective deal is fraudulent?

In order to prove that they have the right to foreclose on a property, it is becoming standard for lenders to be required to produce the original note on the property.  The note is required before a court will allow a lender to sell a property.  It must show that the true lender is named with a recorded economic interest in the property.  The note as submitted by the lender in a foreclosure hearing may clearly be fraudulent because it was notarized after the fact with a stamp that was not even valid at the time the mortgage was taken out. 

Many times the note was signed by a so-called robo-signer (someone who could not swear in court that they had personal knowledge of the documents in the original mortgage package).  Likewise, assignments and other affidavits presented after the initial mortgage was signed may have been to lenders who were in bankruptcy at the time the assignment was made, or companies already out of existence. The document trail is often just a sham constructed to give the impression of legitimacy for the court.  With an experienced fraud investigator working on your side, you would be amazed how simple it can be to find clear cut examples of fraud.

We all know about the many fraudulent activities that surround foreclosure documentation.  Often these records were signed by a fictitious bank officer who was robo-signing documents for several lenders at one time and signing thousands of documents each day, none of which were read or could be attested to in terms of accuracy of the facts by that fake officer.

For securitized loans the documentation trail is also usually a sham.  Some examples are missing or incomplete records, not showing specific notes being placed into specific securitized trusts, or records may show that these notes arrived after the trust was closed out.  The Pooling and Servicing Agreements that guide the performance and servicing for the trust may require a higher performance level than the notes included in the trust would warrant.  The terms in the notes will almost certainly not match the terms that the investors in the trust agreed to. 


One of the key forms of fraud in the lending process is that the name(s) of the true lender(s) will never appear on the note for a mortgage that was securitized.  Therefore, the buyer never had the opportunity to know who actually provided the funds for the loan.  According to the Truth in Lending Act, this is fraudulent and means the loan was never consummated.

While it is extremely galling to see what the banks have been getting away with for so long, there is good news. More and more rulings are coming down that expose the banks for the frauds that they are. As a result, homeowners across the country are finally receiving justice for wrongful foreclosures and unfair lending practices.

This is a great time to be a real estate investor working with distressed homeowners. Across the country we’ve seen that the law is finally catching up to the banks. Along with District and Appellate Courts all over the country, the Supreme Court has ruled as clearly as possible in the homeowners’ favor. The Supreme Court has clarified that TILA rescission is a powerful tool to stop foreclosure and help homeowners stay in their houses longer. It also creates an opportunity for investors to do some pretty amazing deals. The tides have turned and the banks are being forced to negotiate on our terms. No more begging the banks to accept our short sale and REO offers only to have them demand ridiculously high prices. We can now get the banks to the table to negotiate.

This makes it more important than ever that homeowners and real estate investors act NOW. This is a massive opportunity for real estate investors. If you know of anyone with a defaulted or underwater note, you need to get in contact with my office immediately at (706)-485-0162. I have spent the last two years building up a team of experienced attorneys and fraud examiners/forensic auditors who specialize in exposing fraud committed in the mortgage process and using that fraud as leverage to negotiate the sale of notes. This opportunity is not going to be available forever; we need to strike while the iron is hot!

We have a huge opportunity to help homeowners and do some great deals with multiple exit strategies. For more information, call me at 706-485-0162.

Bob MasseyBob Massey is a recovering corporate executive who is now living the dream running his own successful real estate investing business and teaching others how to do the same. In the process he has become the nation’s leading educator on the foreclosure investing process.

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