Closing Attorney & Bank Lawyer Must Defend Suit Over Alleged Loan Fraud by Others
A closing attorney and a bank lawyer say they had nothing to do with alleged misrepresentations on loan documents that helped a New York woman obtain a home mortgage that requires her to make a monthly payment equal to about twice her monthly income.
But a state-court judge says Portia Joseph can proceed with her case against the attorneys and other defendants over the $629,000 mortgage she obtained despite having an annual income, as a waitress, of only $25,000. She contends that the lawyers helped facilitate a transaction in which she was fraudulently induced into signing documents for a home loan she didn’t understand, according to a New York Law Journal article reprinted in New York Lawyer (reg. req.).
Although it appears that a real estate agent and mortgage broker are the primary targets of Joseph’s suit, she apparently still has a cause of action against the two lawyers sufficient to survive a motion to dismiss: Attorney Adrian Ellis, who represented her at the closing, did not move to dismiss, the article states. And New York State Supreme Court Justice David Schmidt last week ruled that some, but not all, of the claims Joseph made against the attorney for the bank that made the mortgage loan can proceed toward trial.
Schmidt dismissed a fraud count against attorney Joseph Kunstlinger of Rockland County, who appeared on behalf of the bank, but he held that Joseph can continue to maintain claims of aiding and abetting and violation of the New York deceptive practices act.
“We have almost nothing to do with anything other than the fact that the documents get signed correctly. If there is a trial, we will be completely exonerated,” Kunstlinger tells the legal publication.
Similarly, Ellis, who represented Joseph at closing, said it wasn’t his role to examine his client’s finances, only to deal with legal issues, and hence he never attempts to qualify a client financially for a real estate purchase.
“Generally speaking, I don’t know how many attorneys ask their clients how much they earn, then do a financial analysis of whether or not they can afford the property,” he says.
