Legal News for Credit Union Managers Since 1990
« Wrongful Repossession & Conversion: Creditor Held Liable
Worthless (NSF) Checks Constitute Fraud »
22
Dec
2021

Fraudulent Mortgage Application

In this case, two debtors applied for and closed on a mortgage with American General Finance, Inc. (hereinafter “American General”).

The debtors represented to American General that they only had one mortgage on their residence.

American General intended to grant the debtors a loan secured by a second mortgage; American General obtained a title search on the debtors’ property which only disclosed one existing mortgage.

Two days prior to closing on the loan with American General, the debtors issued a second mortgage to another party without informing American General.

Debtors filed bankruptcy and American General filed an adversary complaint with the bankruptcy court alleging their undersecured debt should be nondischargeable.

The court found that the debtors’ failure to disclose information on their loan application that a second mortgage on their home already issued, rendered the loan nondischargeable under the exception to discharge for false financial statements.

In addition, creditor’s title search had not revealed the second mortgage because it had been given two days before the loan closing, and debtor-wife had been employed in a loan department at a bank and was, thus, aware of the importance of accurate disclosure of financial information. American General Finance, Inc. v. Steinbrunner (149 B.R. 484).

Author: Charles R. Harroun, Attorney at Law.



This entry was posted on Wednesday, December 22nd, 2021 at 10:16 am and is filed under Bankruptcy, Mortgages, National, Secured Loans. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Leave a Reply

Your comment

Powered by WP Hashcash

  • Recently Posted Articles written by: Charels R. Harroun, Attorney at Law

    • Defective Notice to Sell Collateral Defeats Collection of Deficiency
    • Credit Union Assessed Punitive Damages
    • Attorney Fees Assesses Against Bankrupt Debtor
    • Automatic Stay Violation: Costs Assessed Against Credit Union
    • Credit Union Lien Survives Chapter 7 Discharge
    • Constructive Discharge: Credit Union Violates Employee’s Rights
    • Right to Cancel – Truth-In-Lending Violation
    • Mechanics Lien Extinguished Credit Union Security Interest
    • Cashier Checks: Bank Liable to Credit Union
    • Reopening Bankruptcy Case Denied
    • Board Member Loses Suit Against Credit Union

  • Website Builder

2009-2020 Copyright Harroun, P.C. | Credit Union Legal Newsletter powered by WordPress and Uchilla
Subscribe: Entries (RSS) and Comments (RSS)