Real Estate Attorneys

Mortgage Fraud 

Mortgage fraud involves an action where the intent is to materially misrepresent or omit information on a real estate loan application in order to obtain a loan that would not otherwise be available to the borrower.  Mortgage fraud is a violation of federal law that can result in imprisonment for ten to thirty years.  It is investigated by the FBI.  Thus it is a serious crime. 

Mortgage Loan Fraud Examples 

Appraisal Fraud:  Takes place when the value of a property is intentionally overstated or understated.   When overstated, more money can be borrowed against the property than what would be justified by a proper appraisal.  When understated, in order to obtain a lower price on a foreclosed property, or to induce a lender to decrease the amount owed on a real estate loan in a loan modification, appraisal fraud has taken place.

Employment Fraud:  Takes place when a borrower claims self-employment in a non-existent business or claims a higher level position in an existing business in which the applicant is employed, in order to obtain a mortgage loan. 

Income Fraud:  Takes place when a borrower overstates his or her income on a loan application in order to qualify for a loan.  This commonly occurs with "stated income mortgage loans" where the lender does not verify the income claimed on the loan application.   

Occupancy Fraud:  Takes place when the borrower intends to purchase an investment (rental) property, but represents on the loan application, that he or she intends to occupy the property as a primary residence or as a second home.  Lenders charge higher interest rates and generally lend a smaller percentage of the fair market value to borrowers who intend to rent their property because default rates are higher with such properties.  In such cases, the borrower has committed mortgage loan fraud because he or she has materially misrepresented the risk to the mortgage lender in order to obtain better loan terms. 

Cash Back Arrangements:  Take place where the price of the property is fraudulently increased in escrow with cash being returned to the buyer-borrower outside of escrow, in order to increase the loan amount and loan to value ratio.  The result is that the mortgage lender loans more money than what it would normally lend making an unsafe loan.  This arrangement would require a fraudulent appraisal.

Identity Theft Loans:  Take place when an individual assumes the identity of a property owner and then uses that identity to borrow money using the property as security.

Shotgunning:  Takes place when several mortgage loans are obtained simultaneously for an amount far in excess of the value of the property and without the knowledge of the other real estate lenders.  Every lender believes it is obtaining a first priority position but only one lender obtains priority over others who often lose their investment.

Use of Multiple "Holding Companies":  Takes place when the owner of a property "sells" the property from one controlled entity to another multiple times in order to create documentation and the appearance of sales (at inflated prices).  This is done in order to justify a high appraisal that is then used to obtain a high loan amount.

Partition of Real Estate

Partition is a legal action in which a co-owner of real property files a lawsuit in order to obtain a court order forcing one or more of the following:

• Sale of the real estate
• Division of the property, and/or
• Division of the profits from the property.

Generally, a partition order by the court provides for an appraisal of the property which establishes either the sale price of the property or the price at which one co-owner can purchase the interest of another co-owner.

Partition suits or actions rarely result in court trials. Partition suits usually result in forcing the co-owners to either voluntarily sell the property or work out a purchase-sale between them.

Partition actions are most common in the following situations:

• Partnership disputes
• Corporate dissolutions
• Property is inherited by people having different objectives. One wants to sell the other wants to retain the property
• Destruction of a condominium building or other co-owned building (by fire, earthquake, landslide, mudslide or otherwise) where the issue of reconstruction is at issue.

For additional information on partition litigation or any real estate matter, please contact us for a no cost initial consultation.

 

Judicial Foreclosures

Foreclosures of real property can be by judicial foreclosure or non-judicial foreclosure. Michael T. Chulak & Associates represents clients who are required to foreclose on real estate and elect judicial foreclosure in order to collect money owing. We also represent clients in avoiding judicial foreclosure.

The types of properties most likely to be foreclosed by means of judicial foreclosure are:

• Rental homes
• Income properties
• Land

In addition, homes subject to homeowner association liens can, and are generally foreclosed by judicial foreclosure when assessments or dues are not paid.

Judicial foreclosures are started by the filing of a lawsuit seeking an order for sale and money judgment.

The judgment can be collected by the sale of the property, wage garnishment, bank account levy, rent levy or other methods.

Judicial foreclosures maximize the opportunity to collect from all available sources of the debtor.

Lawsuits for judicial foreclosures rarely go to trial. Most of these lawsuits result in payment before the need to actually foreclose on the property.

Nuisances and Restraining Orders

The attorneys at Michael T. Chulak & Associates represent clients in abating nuisances and in defending nuisance claims. We also represent clients in obtaining and defending against restraining orders.

Nuisance is defined in California Civil Code Section 3479 as:

Anything which is injurious to health, including, but not limited to, the illegal sale of controlled substances, or is indecent or offensive to the senses, or an obstruction to the free use of property, so as to interfere with the comfortable enjoyment of life or property.

Nuisance is also defined in most CC&Rs of common interest developments. These definitions are generally much more broad than the statutory definition. In fact, many homeowner associations are amending their CC&Rs for the purpose of creating broad language that can be used to abate many types of undesirable activities. In addition, some associations are amending their CC&Rs to permit the board of directors to determine whether a nuisance exists.

A common nuisance provision found in CC&Rs follows:

No noxious or offensive activities shall be conducted within or upon any portion of the Property nor shall anything be done or permitted within any Unit which is or could become an unreasonable annoyance or nuisance to the neighborhood.

Without limiting any of the foregoing, no Owner shall permit noise of any sort (including, but not limited to, barking dogs, the operation of air conditioners, stereo amplifier systems, television sets, motor vehicles and power tools) to emanate from an Owner's Unit or any portion of the Common Area which would unreasonably disturb other Owners' enjoyment of their Units or the Common Area. Excessive noise levels may be determined in the sole discretion of the Board which may, but shall not be obligated to rely on state law.

The following elements must be proven in a court of law to prevail on a nuisance claim:

• That the plaintiff owned, leased, occupied or controlled the property;
• That the defendant created a condition that (one or more):
  
  
  • was harmful to health
  • was indecent or offensive to the senses
  • was an obstruction to the free use of property, so as to interfere with the comfortable enjoyment of life or property.
• That this condition interfered with the plaintiff's use or enjoyment of his or her property;
• That the plaintiff did not consent to the defendant's conduct;
• That an ordinary person would be reasonably annoyed or disturbed by the defendant's conduct;
• That the plaintiff was harmed;
• That the plaintiff's conduct was a substantial factor in causing the plaintiff's harm; and
• That the seriousness of the harm outweighs the benefit of the defendant's conduct.

Call us for a no cost initial consultation concerning any real estate, mortgage or other legal matter.  Please visit: Piercing the Corporate Veil, Free Credit Repair, Attorney - Client Privilege, Real Estate Recovery Fund, Glossary of Real Estate Loan Terms and Punitive Damages.

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