For some, mortgage fraud issues cropped up before foreclosure

For some, mortgage fraud issues cropped up before foreclosure:

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Nelson said not everyone in foreclosure deserves to be there.

"We are not cheats and crooks and bums," Nelson said. "And if we work together, these frauds will unravel in the courts."

Choosing to fight

It's unclear how many people have taken the risky and expensive step of fighting their foreclosures in court. Homeowners and a growing number of local and state governments and regulators are responding with lawsuits and regulations aimed at curbing misleading and abusive tactics that have trapped homeowners in loans they cannot afford.

Roger Rinaldi said his troubles began when a mortgage loan officer falsified his application for a $164,000 loan on a three-bedroom home in Bristol in Kenosha County in 2005.

Rinaldi said the loan officer listed a $15,630 bank account that didn't exist, a college degree he didn't earn and a job — sales manager — that he didn't have.

"I didn't find out about that until two and a half years into the loan," Rinaldi said.

The lender's actions allowed him and his wife, Desa, to secure a $1,776-per-month loan the couple could not afford. Rinaldi also alleged the broker raised the interest rate to 8.5 percent from a promised rate "in the 7s" just before the couple, who were moving from Illinois with their three children, closed on the mortgage.

When the Rinaldis stopped paying, HSBC Bank, operating on behalf of Wells Fargo, sued for foreclosure in 2009. The lender then levied a series of fees totalling $4,500, he said.

The company agreed to modify the loan but proceeded with foreclosure anyway — a practice that banks including Wells Fargo must discontinue under the $25 billion s