Full Disclosure: One New Development Can Radically Increase a Buyer’s Fraud Recovery

Written by Columnist:
Samuel Doncaster


Think about the last time a client contacted you with a concern about disclosure. How much better would it have gone if you could have told him that he can recover a large enough lump sum to get a bigger, better house with a lower monthly payment. In this current environment of rising interest rates, now you can. Let me explain.

When Sellers tender bogus SPDS forms, buyers are entitled to recessionary damages. These awards exist to make a buyer whole again. In other words, they should be large enough that the Buyer can sell the house, turn around and buy a new one, and have all his incidental expenses covered. 

One new development in this area is rising interest rates. For example, in 2020-2021 homebuyers were seeing interest rates below 3% for the average 30-year mortgage, as opposed to mortgage rates around 5.5% now. Buyers are entitled to a lump sum, in advance, that will compensate them for that difference. 

Let’s say a buyer purchased a $500,000 home in 2021, financed $300,000 of the purchase, and now discovered an undisclosed defect. If they actually replace the house, the replacement loan will be at 5.5%, instead of last year’s average mortgage rate of 3%. The buyer will pay $155,332 in interest over 30 years for their $300,000 mortgage if their interest rate was 3% in 2021, whereas that same loan would have an interest cost of $313,212 at today’s 5.5% rate. That’s $157,880 extra interest.

To make that buyer whole, they are entitled to the difference between the dollar amount they would have paid in interest on their mortgage at the lower rate, and the dollar amount they will be forced to pay with a higher interest rate—in this case, the buyer would be owed $157,880.

Here’s where things get interesting. The buyer experiences that damage incrementally over 30 years. It comes out to a few hundred dollars per month. But our court system is build around awarding damages in a lump sum. So the buyer is entitled to the entire $157,880 as a lump sum as soon as the fraud is discovered. This extra money, on top of the rest of the damages he’s entitled to, gives him options. One of those options is to use lump sum to create a much larger down payment and get a nicer home than he originally bargained for. For many buyers, this extra money will create better options than they had on their prior purchase. 


Samuel Doncaster is the owner and founder of Fraud Fighters law Firm. He regularly addresses SPDS fraud, and he’s been featured in multiple media outlets for this word. He also writes regularly on the subject, and has more information available at his website, fraudfighterslawfirm.com. If you have questions about this or any SPDS fraud issue, give the firm a call, 480-666-4054.

Stephanie Galvis also contributed to this article. She’s a student at the Saint Thomas University School of Law and has won a CALI book award for legal writing and been included on the Dean’s List every semester of her education.