Fraud Claims Filed Against Real Estate Agents, Mortgage Firms

The U.S. mortgage crisis and financial meltdown can claim several more victims. A lawsuit filed by a group of Baltimore homeowners claims that mortgage firms and real estate agents committed fraud, gaining fees and commissions for while saddling clients with unwanted loans and the consequences of unsatisfactory home sales.

"Buy Now, Sell Later" Schemes

According to the Baltimore Sun, the proposed class action is based on efforts to sell the plaintiffs' homes and buy new real estate in 2006 and 2007. The lawsuit claims the defendants orchestrated a fraudulent "buy now, sell later" scheme. They allegedly forged signatures, fabricated documents, applied for home equity lines of credit without permission and lied about non-existent loans. As a result, the plaintiffs bought new homes first and sold their old ones later - for much less than expected.

Maryland Fraudulent Misrepresentation

Fraud claims are based on alleged misrepresentations, or false statements of fact. To succeed in Maryland real estate litigation based on fraud, a plaintiff must prove that:

  • The agent made false statements
  • The agent knew the statements were false or made them with reckless indifference to whether they were true
  • The agent made the statements for the purpose of defrauding the plaintiff
  • That the plaintiff relied on the misrepresentation and had a right to do so with full belief in its truth
  • The plaintiff would not have gone through with the transaction if the misrepresentation had not been made
  • The plaintiff suffered damages directly from the misrepresentation

Even if the realtor or agent did not knowingly lie, they can be held liable for negligent representations. Either way, the homeowner must show the court that false statements caused damages, such as increased purchase price (if buying), decreased sale price (if selling) or a failed transaction from which they lost money.

According to The Wall Street Journal, the extent of liability can depend on several factors. For example, false information can be deliberate, coming directly from the agent or realtor. Perhaps, though, the agent failed to protect the homeowner from false claims made on the other side of the transaction.

Homeowners who believe they are victims of fraud should seek legal representation by a skilled real estate attorney. Whether the misrepresentations occurred while selling or buying a home, legal action might help to recoup fraud-related losses.