This issue rests in the difference between knowledge and wisdom. It can be said that knowledge is knowing something can be done, and wisdom is knowing if it should be done. You be the judge.
Most people who have been affected by foreclosure have an automatic ‘knee-jerk’ reaction and jump straight to accusations of fraud having been committed against them and they would be correct in doing so in my opinion (for what that is worth). But, this begs the question, is it beneficial to make that claim?
To answer this question we must look closely at fraud. In this article I will focus on the elements of fraud that must be proven, and the types of fraud applicable to foreclosure.
Though there are some states in where there are statutory provisions for more than four elements in fraud such as in Oregon in where there are nine elements that must be proven, in general there are four essential elements of fraud that must be proven in a successful fraud claim. “(1) a misrepresentation of a material fact; (2) by a person or entity who knows or believes it to be false; (3) to a person or entity who justifiably relies on the misrepresentation; and (4) actual injury or loss resulting from his or her reliance.” http://criminal.findlaw.com/criminal-charges/fraud.html#sthash.g9WyYBFd.dpuf
The onus probandi (burden of proof) rests upon the claimant to prove up all of these essential elements in order to prevail on a fraud claim. This is not as easy as it sounds. Where most fraud claims fail is on intent. Another thing to keep in mind is the nature of the fraud. Some frauds are criminal in nature while others are civil in nature
There are several definitions of fraud depending on where you look, but in general fraud is defined as; “1. A knowing misrepresentation of the truth or concealment of a material fact to induce another to act to his or her detriment. 2. A misrepresentation made recklessly without belief in its truth to induce another to act. 3. A tort arising from a misrepresentation, concealment of a material fact, or a reckless misrepresentation made to induce another to act to his or her detriment. 4. Unconscionable dealings; esp., in contract law, the unfair use of the power arising from the parties’ relative positions and resulting on an unconscionable bargain. Black’s Law Dictionary 2nd Pocket Edition (2001) Id. 292.
There are many types of fraud ranging from constructive fraud to tax fraud. Some of the types of fraud that might apply to a mortgage or a subsequent foreclosure would be:
- actual fraud – A concealment or false representation through a statement or conduct that injures another who relies on it in acting.
- constructive fraud – Unintentional deception or misrepresentation that causes injury to another.
- extrinsic fraud – 1. Deception that is collateral to the issues being considered in the case; intentional misrepresentation or deceptive behavior outside the transaction itself (whether a contract or a lawsuit), depriving one party of informed consent or full participation. 2. Deception that prevents a person from knowing about or asserting certain rights.
- fraud in the factum – Fraud occurring when a legal instrument as actually executed differs from one intended for execution by the person executing it, or when the instrument may have had no legal existence.
- fraud in the inducement – Fraud occurring when a misrepresentation leads another to enter into a transaction with a false impression of the risks, duties, or obligations involved; an intentional misrepresentation of a material risk or duty reasonably relied on, thereby injuring the other party without vitiating the contract itself, esp. about a fact relating to value.
- fraud on the court – In a judicial proceeding, a lawyer’s or party’s misconduct is so serious that it undermines or is intended to undermine the integrity of the proceeding.
- intrinsic fraud – Deception that pertains to an issue involved in an original action. Examples include the use of fabricated evidence, a false return of service, perjured testimony, and false receipts or other commercial documents.
- promissory fraud – A promise to perform made when the promisor had no intention of performing the promise.
- fraudulent concealment – 1. The act of refraining from disclosure; esp. an act by which one prevents or hinders the discovery of something. 2. The act of removing from sight or notice; hiding.
Source: Black’s Law Dictionary 2nd pocket Edition (2001) Id. 293, 394.
Given the definition, the essential elements, and all of the types of frauds applicable to mortgage transactions, and subsequent foreclosure the number one most difficult thing to prove is the parties intent to misrepresent, deceive, or conceal. Of all of the types presented here, constructive fraud may be the easiest to prove as constructive fraud, though absent intent has the same effect as if it were intentional.
All of the above considered, if a litigant can prove other issues that would bear the same desired result such as breach of contract, ineligibility of the Note to be negotiated, forgery, or other issues that may lead to a cause of action these issues might be far easier to prove than fraud.
I in no way wish to imply that fraud in some form cannot be proven, nor do I wish to discourage anyone from filing a fraud claim, if all of the elements can be satisfied. What I do encourage is that a litigant explores all avenues to remedy before coming to a final conclusion. Fraud can be evidenced without being outright claimed.