Lender Liability & The Areas Of Claim

What is Lender Liability?

Lender Liability means a varied set of actual situations under which a lender can be possibly held liable for claims based on contract breaches, tortious behavior, common law duties, violations of state and federal laws, and other suspected unjust and unlawful behavior.

Lender Liability Law:

The lender liability law comes as a savior to borrowers that protect them from unfair practices of the lenders. This has been clearly brought to light during the foreclosure crisis during the 21st century. This period saw a lot of mortgage companies playing foul game with their borrowers by foreclosing their home loans and taking possession of their homes. If you are interested in lender liability click on this linkĀ

Legally speaking, a mortgage company has to follow each and every law that guides the procedures for foreclosure of a mortgage. It is also important that the borrower is well informed about the actions that are going to be taken and the reasons behind such actions well in advance before actually executing the actions. When lenders fail to follow these legal procedures, then the borrower has all the right to file a lender liability suit against the lender.

law-1General Areas of Claim under Lender Liability:

Lawsuits are filled against lenders under the lender liability law by borrowers under circumstances when the lender forces some unfair and unjust deeds like uninformed foreclosures, unfair collection practices and tortious behaviors on them. Basically the most widely raised claims under lender liability on behalf of the borrowers include:

  • Breach of Contract
  • Fiduciary Relationships
  • Inappropriate Collateral Sales

Breach of Contract:

A Contract is basically an agreement agreed upon and mutually consented by two parties. When either of the party involved in the agreement violates the terms of the agreement, then arises the Breach of Contract. Under Lender Liability law, breach of contract often arises when the lender fails to uphold the end of the contract. This is non-less than a fraudulent activity and hence happens to be the most common and widespread reasons for filling of lawsuits.

In such cases, lender liability law supports the borrowers interest and defends them all unfair and unjust practices. With the advent of many law firms providing services, borrowers are provided with lot of options to regain justice legally.

Fiduciary relationships:

A contract is an agreement based on trust factor between the parties and it is in the best interest of both the parties that an agreement should be drafted. There is a basic untold principle that the contract is built on a good faith basis and both the parties have to abide by this principle. Though it is understood that mortgagers and banks lend to borrowers for a profit, it should be done in an absolutely fair manner. The borrower has to be clearly explained about the causes and consequences of the loan taken. It should be remembered that misleading or concealing important facts that may be instrumental in the decision making process of the borrowers is serious fraud and in such cases, a lawsuit can be filled against the lender.

should-you-define-your-path-for-law-school-1Inappropriate Collateral Sales:

A collateral sale is the term given to the sale of the borrowers property in case of payment default to acquire the money that the borrower has defaulted. To do such a collateral sale, the lender has to follow legal procedures like intimating the public of such a sale that is going to happen and call for a bid and sell the property to the highest bidder and after settling all the dues and defaults made by the borrower, the remains if at all, would be handed over to the borrower.

But in some cases, these collateral sales happen in such a way that the borrowers are not intimated properly and the bid and selling process does not take place in a fair and just manner. In such cases the borrower can file a lawsuit against the lender for unlawful and inappropriate collateral sales. When such collaterals have been illegally possessed, the lender might lose his right to collect a deficit.

There is a uniform commercial code that governs all these aspects of lender liability law to ensure that justice is followed and rendered all over the country in an even manner.