Suits over unfunded loans have legal precedent

In 2004 a jury told Ameriquest Mortgage Co. to pay more than $1.5 million to an Arizona couple who lost their home to foreclosure by another lender because, they claim, Ameriquest didn’t fund a loan that was already closed. The borrower forgot to disclose outstanding judgments and unpaid child support on his application which were subsequently uncovered. The jury said discovery Ameriquest’s responsibility.

Whether contracts have changed since 2004 to prevent such lawsuits depends on each individual lender. Some contracts today specify binding arbitration which, although available to everyone, might have been too costly and too time consuming to help the Arizona couple.