In a disconcerting trend for commercial lenders, consumers are naming lenders that financed “mortgage foreclosure rescue” companies as defendants in litigation over failed foreclosure rescue attempts. Subsequently, courts are using equitable concepts with increasing frequency to define consumers as “implied borrowers” in order to amend and even rescind mortgages securing commercial loans.
Foreclosure rescue companies offer a “sale-lease-back” or “credit repair” transaction for consumers. In these transactions, a homeowner transfers the interest in his or her house to the company for a set period of time in exchange for the homeowner being able to remain as a tenant, and an agreement by the company to sell the house back to the consumer. Currently, a number of these consumers have defaulted under the rescue agreements, and, being unable to buy back their house, have brought actions against the foreclosure rescue companies and commercial lenders that financed the companies, alleging violations of state consumer protection statutes, a host of federal statutes, as well as claims of fraud, conspiracy and unjust enrichment.
