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10 Notorious Instances of Foreclosure Fraud

The Thorne Case

One of the primary tenets of any legal action is that for a person to complete certain actions for pay, he or she must be licensed to practice law. As banks become increasingly overwhelmed by mortgage defaults and the foreclosure process, their steps to alleviate the workload can violate this rule.

In this 2011 case, Jonathan and Darlene Thorne allege that their lender and its service provider paid unlicensed contractors to complete legal paperwork. Since the foreclosed homeowner ultimately pays these fees, the Thornes charge that the use of unlicensed contractors amounts to fraud [source: Field].

If this case is resolved in the plaintiffs' favor, it could have implications for the entire foreclosure process. Firms that help real estate attorneys wade through the mountains of foreclosure paperwork piling up on their desks could face costly restructuring, and those attorneys could lose the ability to move through foreclosures at a rapid pace. On the other side of the argument, a ruling that tightens the legal requirements for lenders and their attorneys could force them to pay more attention to the details of the foreclosure paperwork, possibly preventing accidental foreclosures from happening [source: Curry].