Fraud Claim Against Lender Dismissed

"Courts have held that there is no duty on a lender to ensure that a loan is suitable for a borrower," wrote Judge Jones in a recent case dismissing a fraud and misrepresentation claim brought by a home owner against the lender.  In this case, the plaintiffs alleged that the loan officer told them that their income qualified them for the loans they were seeking, when in fact plaintiffs' income was not high enough to meet debt to income ratio utilized by mortgage lenders.  The Court found that these allegations were not sufficiently specific to meet the heightened pleading standards of Rule 9.  "Without more, plaintiffs' allegations essentially amount to an assertion that the lender convinced them to take out a loan they couldn't afford," which is not a basis for fraud.