Mortgages Expert Witness On Hard Money Lending Part 2

Mortgages expert witness Joffrey G. Long will moderate a special session on title insurance as part of the January 30-31 educational program presented by the California Mortgage Association in Universal City, CA. In Securing a mortgage expert witness: Types of real property lawsuits, Mr. Long writes:

There are many types of lawsuits involving loans secured by real property; they often fall into one of six general themes:

2) The commercial loan gone bad: In this case, again often involving loans originated in 2007 or before, (and with a surprising percentage originated in either 2006 or 2007) a commercial property owner or developer has obtained a loan, or often a series of loans from a commercial institution or private money lender.

Problems in these transactions often revolve around the manner in which the loans were originally set up or documented, claims that rates and terms were usurious, issues related to subsequent loans from the same provider, default penalties and default interest rates, advances or modifications, various lending and borrower entities, documentation, lien priority and matters related to title insurance coverage.

3) Private investor’s loss of capital: Here, the lender, rather than the borrower, has a complaint. In these cases, private investors who have invested funds in private money loans are suing the providers/organizers of the loan investment(s), (who may be loan brokers, “pool or fund” managers, or others who accept funds from investors) the borrowers, or other parties to the transaction. Issues revolve around the manner in which the funds were raised, duties of the provider to analyze and underwrite the loan, disclosure of risk, possible “self-dealing” and undisclosed conflicts of interest, violations of securities laws and failure to properly manage (service) the various aspects of the loan after origination.

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