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Whistle-blowers and Seller Financing

Posted by 15789465 on

I'm throwing this topic out to you guys, to see if anyone knows more about whistle-blower law suits in Alabama. I remember something from law school called  a "qui tam" lawsuit. It was a whistle-blower lawsuit filed by a private individual in cases where government could impose a penalty for misconduct, but had not done so. The whistle-blower could file a lawsuit against the wrongdoer, and receive some or all of the penalty as reward. After an admittedly quick search, I could not find anything specifically recognizing this in Alabama. Several cases I found mentioned it, so I guess that is good support. Also, Alabama Code 6-5-461, says: "In claims upon which an action has been filed by informers, unless otherwise specifically provided by law, the first filed shall have precedence, and all others shall abate." In other words, if multiple whistle-blowers file lawsuits for the same thing, the first one to file can go forward, and everyone else is out in the cold. So, this statute seems to recognize that qui tam actions are still recognized in our courts.  It's one of those ancient English common law things dating back to the time of Richard the Lionheart (remember him?  brother of King John, who signed the Magna Carta, beneficiary of money raised by Robin Hood to ransom him from his Austrian captors, son of Eleanor of Aquitaine and Henry II, depending on what movies/books fascinate you) that are often forgotten about in the 21st century. Whistle-blower lawsuits might be one of the ways the Alabama State Banking Department finds out about unlicensed mortgage loan originators engaging in seller-financed transactions that exceed the one-loan-per-year limit for balloons, or the three-loan-per-year limit for all seller financing. And, in case you just started following this topic, remember that "loan" includes bond for title, contract for deed, land sale contract, vendor's lien deed, and all the other "workarounds" for mortgages. Also, if you want to investigate this whistle-blower lawsuit further, there is a specific federal statute called the "false claims act" that allows such suits in federal court, for violation of federal laws.  Mortgage broker licensing is not a federal law. The feds made us pass the law, but it is a state law. But, you might be curious in other contexts.

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  • That’s certainly possible, but the easiest thing is to require the license number on the face of the document. No license number, no recording unless you also sign an affidavit saying you are exempt. BUT, I bet they would send a copy of the exemption affidavits to the state. This stuff is all so new, the details have not yet been worked out.

    Denise L. Evans on
  • The new law could enforced the county court house to send a copy of each recorded mortgage to the state banking commission made by individuals….. then the courthouse will charge an extra fee for the work…

    wm mark spry on

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