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Fraud By Loan Introducer and Son
The First Title Insured Lender advanced loan funds of $750,000 against the security of an unencumbered property. The owners of the property were away on holiday when the loan was taken out. On their return from holiday, the owners discovered the mortgage due to the loan statements clogging up their letterbox!
The fraudster, who was the loan introducer, was arrested. The borrowers son had apparently assisted him in perpetrating the fraud with the loan funds being dispersed and unable to be traced. The police believe that some of the loan funds were transferred offshore with the remaining funds being gambled away.
This case raises an issue over whether the First Title Insured Lender has an enforceable mortgage which secures the loan funds advanced. Similar to the recent case of Perpetual Trustees Victoria Limited v Tsai, the argument has been put forward that as the mortgage was 'all monies' with reference to collateral loan documentation, and the owners did not sign the loan agreement, the mortgage secures nothing.
First Title has retained one of Australia's premier law firms and Senior Counsel this matter given the importance of this case.
Under First Title's 'Duty to Defend' obligations in the Policy, all legal defence costs (which are likely to be significant) will be met, as well as any loss the lender might ultimately suffer.
