Settle Out of Court or Pursue Mortgage Litigation

When a borrower is made aware that they have been made a victim of lender fraud, they are faced with two options:  Pursue litigation or pursue an out of court settlement.  Each one has its pros and cons that need to be weighed by the borrower before making this very important decision.

An out of court settlement is often much faster than mortgage litigation.  Depending on the schedule of the lawyers, the judge, and any experts that may need to be called, getting all the necessary people together on the same day at the same time can be difficult and could add time to the length of the trial.  More complex cases with lots of data, numbers, and pages of contracts that need to be reviewed will also take longer, while the court sifts through the data to extract relevant information needed to make a decision.  An out of court settlement, if negotiated by a skillful and experienced negotiator, could be opened and closed within a matter of a few days. 

When a lender makes an offer to settle a dispute with a borrower out of court, they are essentially waving the white flag, declaring the borrower the winner.  Most lenders will attempt to avoid litigation for two reasons, to avoid the cost of fighting a losing battle and to avoid any negative press that may come as a result of being found guilty in court of having committed lending fraud.  In both of these cases, an out of court settlement is usually the least expensive option. 

Unlike an out of court settlement, the pursuit of mortgage litigation is not an automatic win.  Even with the strongest evidence, borrowers risk losing their case and getting nothing from their lender.  For many proud homeowners, taking their lender to court is a matter of right and wrong.  Some borrowers would rather roll the dice and take their lender to court than accept a guaranteed settlement.  Some might call this foolish, but it is still the right of the borrower to refuse the settlement and take their chances in court.  There are a few borrowers out there who will take greater satisfaction from exposing the illegal actions of their lender to the world than walking quietly away with a check and/or revised mortgage contract in hand.  Most out of court settlement offers come with the confidentiality agreement that must be signed by the borrower if they agree to accept the offer.

In the event that a borrower wants to pursue an out of court settlement but is not pleased with the settlement offer, they may elect to stop all settlement negotiations at any time before a final agreement is made and take their lender to court.  This allows borrowers to hear the settlement offer of their lender before deciding whether or not to take the risk of mortgage litigation.  Keep in mind that the stronger the evidence against the lender, the lower the risk of losing in trial.  Before approaching any settlement negotiations, a borrower should consult with a mortgage litigation attorney to determine their chances of success in court and a fair settlement offer to shoot for.  Armed with this knowledge, a borrower can make an informed decision about what option to take.