Expert: Morgan Smith - 1/27/2012

Question
Hi,

We had a house up for sale, we required that any potential buyers be pre-approved by a reputable lender before a home showing could occur.

A buyer came with her agent with an approval letter which we later found out was forged by her agent (with approval from the mortgage lender)

A week before closing on the home (and after our family had already  moved out of the home is when we found out that the bank approval letter was forged by the buyer's agent and that the buyer was not approved for any home loans, she was denied a home loan.

By this time we had already purchased a new roof for the buyer (per her request) and had moved out of the home and signed a 1 year lease on another home.

The state did an investigation and determined that the mortgage company gave permission to the agent to forge the bank's name on the false document. Needless to say the entire deal fell through.

Is it legal for a mortgage company to give real estate agents permission to forge home loan approval letters (especially when the buyer was already denied the home loan)? And how can we ensure that this never happens again to another home owner?

We lost a total of $16,000 because of the forged approval letter.

Answer
Dear M Moss,

Before I respond further to your question, I must make clear that I do not represent you, and cannot give you individual particularized legal advice. No attorney client relationship is created by this email. For legal advice, you should hire your own attorney, and follow their advice. My role with AllExperts is limited to providing general information and suggestions for educational or general knowledge purposes.

Before you take any action, consult with your own attorney. Speak to an attorney licensed to practice law in your state about the strengths, weaknesses, and likely outcomes of any contemplated cause of action or defense.

Your question is about fraud, forgery and remedies for those acts.

I am not going to give you a simple answer about whether an event is legal, or how to stop someone from doing something.

I do recommend that you bring your information to an attorney licensed to practice in your state right away.  You probably have meritorious causes of action for fraud among other things against the agent and mortgage company based on your facts.

Fraud is a knowingly false and material mis-statement of fact that causes the victim to act in reliance upon it.  Your example of forging signatures on a document and passing that off as genuine sounds like fraud to me.  Also, when we talk about our home in court, we get a particular bit of extra attention.

I think it is likely that you can prove the elements of fraud. I would not be surprised to learn that if you work diligently on this case you will obtain a money judgment in civil court.  Further, if you work with the authorities, you may get restitution from a criminal case.  

Both of these recoveries could occur after a judge or jury determines that what happened was not legal.  Perhaps when the news gets out of your victory, the malfeasants will not repeat this behavior.

I hope this helps, good luck to you.

Morgan Smith
SMITH & RAVER LLP
Minneapolis, Minnesota
smith-and-raver-llp.biz
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