The Federal Trade Commission (FTC) is the consumer protection agency of the United States. It enforces federal consumer rights laws against practices that violate the FTC’s consumer protection laws. These laws are enforced through a variety of legal actions and enforcement procedures. The most common method of enforcement is through class action suits filed in federal court. Class action suits refer to a lawsuit filed in which a group of people who were victims of fraud are joined together in a suit against the person or company responsible for the fraud. When a class action suit is filed, it names many people as parties to the suit.
When a consumer is the victim of a deceptive act or fails to obtain the services that he or she needs from a business because of a misrepresentation on the business’s promissory note, the defendant has a duty to correct the mistake. Failure to correct a mistake is a defense to liability. Businesses are generally liable for their actions even when there is no proof of deliberate mis-selling. A plaintiff who is filing a complaint of mis-selling cases must prove three things beyond a reasonable doubt that a misrepresentation of a material fact affected the transfer of goods or services. First, the plaintiff must establish that the defendant failed to make a proper disclosure in a timely fashion; second, the plaintiff must establish that a reasonable person would have recognized the misrepresentation; and third, that the harm resulting from the misrepresentation was substantial enough to cause a change in conduct or result in an unfair or deformed contract.
In order to win mis-sold cases, plaintiffs need to prove all three elements of the underlying fraud. To prove the first element of the defense to liability, plaintiffs need to show that a reasonable person would have recognized the representations made. Plaintiffs cannot rely solely on business records to support their case. Many records are mis-sold and fraudulent. A good rule of thumb is to seek legal counsel from an expert who has experience in financial mis-selling cases.
Second, the court must establish that the defendant failed to make a disclosure in a timely manner. This is the core issue in mortgage mis-selling cases. Many arguments arise out of the shoddy workmanship of loan officers. There are arguments about whether they were deceptive or not, but there is no way to prove one way or the other without hard evidence and sometimes very long court trials.
Third, the court must determine that a reasonable person would have foreseen the fraud in question. This is usually called a fraudulent intent claim. If the court rules in favor of the lenders, homeowners may never be compensated. It’s a sad fact that many frivolous claims are successful in the courts, but it can be very difficult to convince juries of this point.
Fourth, mis-selling cases involve issues of damages, not fraud. Some homeowners have been awarded large awards based on the amount of principal they originally borrowed. There are some cases involving triple and quadruple damages. There are other types of compensation, like attorney fees and interest, and all these can add up to large amounts.
Fraud in mortgage sales often occurs when the seller has an interest in your property and uses clauses in the contract to collect the loss. There have been instances of real estate developers who have charged interest rates far above their fair market value. One common problem is mis-marking in the fine print. Mortgage companies regularly mark up interest rates without making any changes to the original contract. The result is that borrowers are billed interest rates in excess of 365%. One reason for this is that the English courts do not consider interest rate issues as a material consideration in lending decisions.
Fraud is a difficult area of the law. It takes special knowledge and experience to deal with the complexities involved. If you suspect that your lender has committed any of the described offenses, you should contact an experienced litigation lawyer. He or she will be able to assess the strength of your case and advise you on how to proceed.