Bank Fraud Victims

Major mortgage lender sues for millions in real estate fraud

A major wholesale mortgage lender is suing an Indiana mortgage broker, a title company and an appraiser for allegedly using inflated appraisals to bilk the lender out of millions of dollars, the Fort Wayne News-Sentinel reported.

ABN AMRO Mortgage Group, a wholly owned subsidiary of Standard Federal Bank, filed the lawsuit last year in U.S. District Court in Fort Wayne, Ind., the News-Sentinel reported. ABN AMRO is one of the country's largest wholesale mortgage lenders.

The lawsuit names 15 defendants, including Maximum Mortgage, Accelerated Title Co., Appraisal Source and Allen County Appraisals, reports said. The lawsuit alleges that while ABN loaned more than $5.5 million on 149 rental properties two investors bought from one of the defendants, the properties were only worth $3.1 million, according to reports.

A spokesman for a defendant in the lawsuit, Maximum Mortgage, told the News-Sentinel neither he nor any of the others named in the lawsuit did anything wrong. The problem lay with the lender's poor business decisions, the spokesman told the News-Sentinel.

Papers in the lawsuit described ABN as the fourth- or fifth-largest wholesale mortgage lender in the country, buying loans from 4,000 to 5,000 mortgage brokers in all 50 states, reports said. The brokers are agents of the mortgage borrowers and help borrowers get loans by presenting information including employment and credit reports to firms such as ABN.

The lawsuit alleges that in several cases, ABN made loans that were at least twice the fair market value of the real estate involved, and in one case, it was eight times more than the fair market value, the News-Sentinel reported. The properties involved are scattered throughout older areas of Fort Wayne, reports said.

Accusations against the defendants include breach of contract, fraudulent misrepresentation of claims, constructive fraud, negligence, breach of fiduciary duty, unjust enrichment, tortuous interference with contractual and business relations, civil conspiracy, decaption, and racketeer-influenced and corrupt-organization activity, reports said.

The suit alleges that the defendant began to notice something wasn’t right when the buyers were unable to service the mortgages, all of which are now in default, according to reports.

Inman News
Consumer Real Estate News



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