According to the US Treasury Department, mortgage fraud reports across the country jumped 88% in the second quarter of 2011, with California registering more reports of suspected mortgage fraud per-capita than any other state (see the data from the Treasury Department here). Much of this increase in reporting is attributed to banks discovering suspicious activity when reexamining loans made during the housing boom (see article from the LA Times here). The effects of mortgage fraud, however, are felt by home owners, banks, and other smaller non-institutional lenders alike.
Recovering losses resulting from mortgage fraud is often an onerous task, sometimes complicated by undercapitalized or insolvent defendants. Thankfully, victims of certain types of mortgage fraud perpetrated within California are eligible to recover some, if not all, of their losses from the Department of Real Estate’s victims’ Recovery Account. The California Department of Real Estate maintains this account though the collection of licensing fees from licensed real estate professionals to help alleviate losses suffered by victims of real estate fraud. In order to recover losses from this fund, a victim must obtain a civil judgment or a restitution order against a licensed real estate professional based on the professional’s fraud, misrepresentation, deceit, or mishandling of the victim’s trust funds. If the victim pursues, but is unable to obtain payment from the defendant, he or she can apply for recovery from this recovery account. Recovery is limited to $50,000 per transaction and a combined $250,000 cap for all claims submitted against any single licensed real estate professional. Claims for recovery from this fund must be filed within one year of the entry of final judgment or restitution order. While these limits on recovery preclude recovery for some victims, the fund provides significant compensation to others who would otherwise recover nothing.
The California Department of Real Estate’s website offers more information on the victim’s recovery fund as well as information to help consumer avoid and identify real estate fraud. If you suspect you are a victim of mortgage or other real estate fraud, the experienced lawyers at Janssen Malloy LLP can help you evaluate your options and assist you in your recovery efforts.