Is this bank fraud? What can I do?

Hello, I am from Mississippi and my issue is quite complicated. First of all, I have never committed a crime or been arrested.

A couple of years ago, Myself, along with a co-signer, purchased a vehicle that was initially financed through Nissan Motor Acceptance Corporation. The interest rate was extremely high (12.95%). I paid my monthly payments for a few months before going to a local bank in an attempt to get a lower interest rate.

The local bank drew up a loan with an 8.5% interest rate and they paid off my vehicle through NMAC. Myself and the co-signer signed the loan documents and the deal was complete. I admit that I didn't read every page of the security agreement, which was an error on my part. A month or two later, I received the title to the vehicle in the mail, clean, and with no leinholders. At this point, I assumed that my loan with the bank was given to be because my co-signer has really good credit and already has a good standing with the bank.

After having the vehicle for a few months, I decided I wanted something else because my current vehicle was not very good on gas mileage (17-24 miles per gallon). I went to a Mazda dealer and traded the vehicle for a car with much better gas mileage.

The bank (Loan with 8.5% interest rate) has called me and said that they needed a copy of the title to my vehicle that they financed. I told them that I don't own that vehicle anymore and that I traded it for another car. They accused me of committing bank fraud and want to talk with me in person.

Even though I traded the vehicle, I have continued to pay my monthly payments on this loan every month for the past 2 years and have never been late. My intentions were not to defraud the bank. If they were, then I would have stopped making the payments. It was just a complete misunderstanding on my part, as that was my first time to ever buy a vehicle on credit.

I don't know what to do and I am so scared. I tried to consult with an attorney but he said he would require a $5,000 retainer fee and $175 per hour, and that the retainer had to be paid up front. I don't have that kind of money.

I can't give them a lein on my current vehicle becuase the Mazda was $22,000 and they only gave me $16,000 for the Nissan, so I have a loan with Mazda for the difference. Mazda currently has a lein on my current vehicle.

Someone please help me.

More information

Mississippi again,

In response to your reply, here is a little more information.

Okay, the bank paid off the Nissan and re-financed it for me at a lower rate.
Whey they paid off the Nissan, Nissan sent ME the title, clean, with no lien.
I took the vehicle to the MAZDA place to trade it in.
I gave MAZDA the clean title (so they saw the vehicle as being owned by me)
They gave me $XXX for my NISSAN and i purchased a MAZDA for $XXX (more money)
I have a new loan with MAZDA for the difference in my trade and the new car.
I still make payments to the bank on the old loan for the NISSAN.

Does that help?

So your making payments to Nissan Motor Acceptance Corporation on a vehicle you no longer have and they discovered the vehicle was traded and they don't have the title (as they should have from the beginning or they accidentally sent you the title) as collateral for the remainder of the loan life, and you traded the vehicle along with the title for the Mazda?

Did you tell the Mazda financing company about the loan?

Try to get a personal loan fast for the balance owed to NMAC and pay them off.

I think I understand what he was saying.

Bought Nissan, financed through NMAC.
Refinanced auto loan with bank X, NMAC released lien and he got an unencumbered title. Bank X should have recorded their lien and probably did but not after he got a copy of the title showing no lien.

He then goes and buys a Mazda, trading in the Nissan showing the title that shows no Lien. Mazda dealer (or whoever they are dealing with on the trades) finds out that there is indeed a lien on the car despite representation made by the OP and they rightfully consider this a fraud.

First off, I am not going to make any positive or negative assumptions about you or your situation.

I would be happy that the bank wants to talk with you in person because the bank does have the option to charge you with fraud as others have suggested. I would go talk with the bank and explain your honest intentions. I would also agree with the bank anything that they suggest to rectify the situation. Just my .02.

Yeah, what you did sounds a lot like fraud, and would probably sound a lot like fraud to a prosecutor. Not saying that it is, just that it looks that way.

The good news is, they don't care about arresting you, they just want the $$$.

Emphasize that you've been paying them, that you're going to keep paying them, that it was a dumb-but-honest mistake, and be amenable to any solution they propose. Tell them it's not fraud, because if you were trying to defraud them, you'd have stopped making those payments.

Hopefully they'll reason they're more likely to get their money if you're not locked up.

First, assuming you were simply clueless and had no intent to defaud the bank, then you did not commit a crime.

Second, the bank f'ed up by not recording its lien on the title. This would have required the clean title that you got in the mail. The bank should have had NMAC deliver the title to it, rather than to you. It also could have put a restrictive endorsement on the payoff check, which it probably did not.

The bottom line is that the bank loan is now unsecured. You no doubt defaulted on the loan, so the bank may sue you for the full amount.

If I were you, I'd simply offer to give them a lien on your new Mazda, and promise to continue to pay the loan.

Let us know what happens.



As a side note, I once had a very similar case (I represented the bank). The customer borrowed $30k for a new vehicle. The difference was that the check, which was made payable to the customer and the dealer, had a restrictive endorsement on it stating that the endorser agrees to record a lien on the title. Well, no lien was recorded, and the customer sold the car to a good faith buyer and stopped making loan payments. Because of the restrictive endorsement, I was able to force the dealer to repay the amount owed. The OP's bank did not cover its *ss.

Thanks for the Help

Everyon, thanks for the help and suggestions. I went and met with the bank, along with my co-signer, and I told them that even though it appeared I committed a crime, that my mind had no criminal intentions (I think it's called mens rea? or something like that). I also told them that had I intended to commit fraud, I would have stopped paying the note. They offered an option.

They wanted to payoff the mazda for me, then draw up a new loan which covered both amounts. Given this, there would be a new loan for about $30K and the loan value on my Mazda 3 is only about $13K. They then proposed that I find more collateral to cover the gap since the collateral at this point wouldn't be worth the loan amount. They asked my co-signer if there was any additional collateral or monies (trusts, CD, Investments) that we could offer. My co-signer does have a paid off vehicle worth about $10K but was very angry with me as this was looking like the only option.

We both decided not to go this route and have thought about it quite a bit. My co-signer is my best friend and has been for about 9 years. He has a credit card with a $25,000 credit limit through Merryl Lynch. He is going to pay off the bank with this credit card. #1: That gets his name off of the loan. He doesn't want his family to know he co-signed anyway. #2: The interest on the credit card is 5.9% APY as opposed to 8.5% with the bank, so it's actually saving me some money. We called Merryl Lynch and ran the scenario by them and they estimated that the monthly minimum payment would be around $670 (A bit more than my current $543.85 payment). I can afford it so it's not so bad. My friend made me sign a promissory note (and I didn't mind).

That's the only other option we could think of. My family has merely a high school education and they have no monies or anything they could offer as collateral. I am thankful to have such a great friend.

If you have any objections to this, let me know. It's the only thing we could come up with, other than putting his vehicle as collateral and he doesn't want to do this.

The credit card rate is 5.9% right now, but that can change at any time. Many things, including the whims of the bank can trigger an increase of that low rate. I would suggest that you pay extra money on that account every month to get the balance down as quick as possible, because if the rate jumps to 14.5% (the current average rate), then your monthly payment will more than double.