More On Foreclosure Fraud, Modification Madness Lawsuits.

   In the same week as the Nevada Attorney General (and the Arizona Attorney General) filed suit over Foreclosure Fraud and Modification Madness, posted here on Sunday, December 19, 2010, a Jury in U.S. District Court in Nevada awarded $79,000.00 in Compensatory Damages and assessed $5,100,000.00 ($5.1 Million) in Punitive Damages in a Foreclosure and Modification Fraud case.  The Nevada Jury award is reported by Gretchen Morgenson, "Fair Game/Opening the Bag of Mortgage Tricks" p. 1, col. 1 (New York Times Nat'l ed., "SundayBusiness" Section, Sunday, December 19, 2010).

   The Jury reportedly returned a Verdict on all Counts.  The Complaint contained causes of actions or Claims for Conspiracy, Breach of Contract, Breach of Fiduciary Duty, and Breach of Good Faith and Fair Dealing.  Id.

   The suit was filed against loan servicers by a group of 50 Plaintiff investors in commercial loans.  "Loan servicers act as intermediaries between borrowers and their lenders, collecting monthly payments and real estate taxes and forwarding them to the appropriate parties."  Id.  In that case, the Defendant loan servicers allegedly:

1.  Took money rightfully owed to the Plaintiff investors holding the loans, by "improperly charging" various items, including:

   a.  "default interest,"

   b.  "late fees and"

   c.  "loan origination fees".

 2.  Constructed obstacles to loan repayments and hid them from the Plaintiffs when Borrowers "tried to pay off or otherwise resolve disputed loans," including:

   a.  They refused to negotiate, or

   b.  They counseled Borrowers to seek loan modifications for which the Defendant loan servicers allegedly "reaped undisclosed fees".

Id.

   More and other investors are expected to grow the list of lawsuits over Foreclosure Fraud and Modification Madness.  Id.  The results of the past week are certainly no inhibition to that happening.

The harmful effects of Foreclosure Fraud and Modification Madness on Mortgage Insurance Claims are explored by Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" § 3:106, "Mortgage Insurance" (West Publishing Co. 2010 Supplement).

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