Summary
Real-estate owned loss
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Extract
Recovering damages.
RECOVERING DAMAGES
REO losses can be caused by fraud--and some courts have held unscrupulous escrow companies liable for the damage. Far too often--certainly more often than anyone in the industry would like--the reason for an REO (real estate-owned) loss is that the original loan application was fraudulent. Sound lending decisions have nothing to do with such losses. Each time such a fraud occurs, a lender is victimized by factors that defy proven risk management techniques and careful underwriting skills. The loan, if the truth were known from the beginning, should never have been made in the first place; default occurs early in the loan's history; and the property is worth significantly less than the loan amount. If there is fraud in the application, frequently there is no private mortgage insurance coverage either, because mortgage insurance carriers often deny claims due ...See the full content of this document
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