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Question DetailsAsked on 10/15/2017

Bank did not disclose contractor defrauded the bank he worked for when I applied for loan.

When applying for a building loan the bank officer did not disclose the fact that the contractor (Who was a bank employee at one time for another bank) defrauded the bank he used to work for and the bank covered it up and fired him.. Now this contractor is doing business with this loan officer who admitted this to me after the loan was granted and now the bank tells me I no longer have the funds available to finish my project. The entire project cost 255,000 and the contractor has already drawn 220,000 from the bank and the house is still not done after 1 1/2 years of waiting. Can I take legal action against this bank for fraudulent lending practices.

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1 Answer


Sounds like you may well have a legal case against the lender - both for failure to disclose known fraudulent history by the builder, and possibly also for releasing more funds than they should have (assuming you did not certify to progress for the progress payments) - assuming these were construction bridge loan funds in bank escrow so they are responsible for verifying payments are based on specific completion progress.

It is also possible you could put a LOT of pressure on them by threatening to take them to the Feds for irresponsible lending practice - dealing with a known fraud perpetrator.

Obviously, both because of the presumably well past completion date issue (which you might be able to terminate the contractor for and clal his Bond to get completion), and because of the bank issues, you need an attorney experienced in residential construction contract issues. Unfortunately, Angies List does not have ratings or reviews on attorneys, so you will hve to get referrals on your own.

Good Luck

Answered 2 years ago by LCD

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