Amicus Brief

Bordas & Bordas has filed an amicus brief in the Fourth Circuit Court of Appeals that sits in Richmond, Va., on behalf of four national, non-profit organizations. AARP, the National Consumer Law Center ("NCLC"), the National Association of Consumer Advocates ("NACA") and the Center for Responsible Lending ("CRL") have asked Bordas & Bordas, along with our co-counsel Bailey & Glasser, to address on their behalf a controversial opinion issued by the federal district court for the southern district of West Virginia in the matter styled McFarland v. Wells Fargo Bank.

These organizations promote the rights of consumers, concentrating on, among other things, advocating for fairness in financial services, by providing policy advocacy, scholarly analysis and books, as well as trainings and community outreach to address predatory lending and other abuses in the mortgage market. Collectively, they represent or counsel thousands of low to moderate-income homeowners each year.  Bordas & Bordas is honored by and appreciative of the opportunity to represent them in this important matter.

In the amicus brief, we argued in support of a homeowner who was the victim of appraisal fraud and facing foreclosure as a result.  Appraisal fraud poses very real harm to residential mortgage borrowers.  A borrower who justifiably relies on an inflated appraisal obtained by a lender to finance a home faces a risk of an "upside down" mortgage, where he owes more than his home is worth and is in jeopardy of foreclosure or an inability to sell or re-finance the home should the need arise later.  On a larger scale, mortgage fraud, which includes the practice of inflating appraisals, has led to a national crisis of home foreclosures, decline in home prices, and a widespread destabilization of the securities market by reducing the value of mortgage-backed securities.

The district court failed to recognize this grave financial reality, instead rejecting the notion that a consumer could be harmed by receiving more financing than the true value of his home should have allowed him to receive as "ridiculous"-simply because the consumer receives credit from the transaction. The district court instead sympathized with the lender in such a fraudulent transaction.  The district court's misunderstanding of the real harm of appraisal fraud to consumers and the incentives of mortgage lenders to engage in such conduct resulted in a decision that could negatively affect thousands of consumers.  Accordingly, Bordas & Bordas, on behalf of its non-profit clients, has asked the Fourth Circuit Court of Appeals to reverse and correct this decision.