A loan contract or agreement carries responsibility on the part of the creditor and the debtor. While borrowers are obligated to repay the debt according to the appropriate terms, lenders are also responsible for acting honestly and in good faith. When this does not occur, fraud and lender liability lawsuits can be the result. Marshack Hays has an experienced team to represent financial institutions, lenders, and government entities in the event of a lending dispute, achieving significant recovery from third party borrowers, real estate appraisers and mortgage brokers. The Firm also has extensive experience negotiating with lenders and secured creditors in Chapter 11 bankruptcy proceedings to maximize the ability of debtors-in-possession to cure defaults, adjust interest rates, reduce security interests, and reorganize secured debt.
What is Fraud and Lender Liability?
Loan agreements require responsibility by both the creditor and the debtor. Both have an obligation to fulfill the terms of the loan, by making timely payments and properly collecting those payments. When a lender fails to uphold their end of the contract, a fraud and lender liability lawsuit may be the result.
Fraud and lender liability laws became widely used in the 1980s and their prominence resurfaced after the credit crunch of 2008. The majority of cases filed in this category involve overly aggressive collection efforts on the part of the lender, rather than an actual breach of loan terms. However, the law can also be used for breach of contract, such as when a lender agrees to provide a mortgage loan and fails to follow through on that agreement.
What is a Breach of Contract?
A breach of contract occurs when one party fails to fulfill their end of the bargain that is under contract. Depending on the specific circumstances set in the contract, a breach can occur when one party fails to perform a certain service on time, does not perform the service in accordance with the terms of the contract agreement, or does not perform the services at all.
Lender liability may include a breach of any or all of the following:
- The loan agreement
- The lender’s fiduciary duty
- Duty of good faith
- Duty of fair dealing
- Other legal obligations owed to the borrower by the lender
Filing a fraud and lender liability lawsuit typically begins when the borrower recognizes some type of unfair or fraudulent conduct on the part of the lender. This is not always as simple as it sounds, since lenders are traditionally seen as the entity in control of the lending situation. However, like lenders, borrowers have certain rights in a loan agreement that are protected under the law.
What are the Legal Rights of Borrowers and Lenders?
At the same time, borrowers must prove that a breach of contract occurred in order to hold the lender liable. Lenders are also entitled to legal representation to ensure their rights are protected and they are able to make significant recoveries against debtors that fail to pay. The unique circumstances and complexities of this type of litigation calls for experienced legal representation on both sides. If you are facing a breach of contract or other business litigation issue, Marshack Hays LLP can help.
Can Marshack Hays LLP Offer Legal Aid with Fraud and Lender Liability Issues?
The attorneys at Marshack Hays LLP represent financial institutions, lenders and government entities in a myriad of financial, lending, mortgage lending, and real property matters. Our team has been at the forefront of the economic crisis, working with private and institutional lenders to achieve appropriate recovery against third party borrowers, real property appraisers and mortgage brokers. Our firm also has experience representing clients in RESPA, TILA and HOEPA disputes.
Disputes over lending terms can result in a stressful situation for all parties involved. The experienced team at Marshack Hays LLP understands the tensions caused by these types of disagreements and will work tirelessly to ensure your rights are protected and you are able to find acceptable negotiation terms.