Mortgage Broker Admitted In Writing To Sharing Our Confidential Financial Information With The Seller, Coordinated With Her On Price, And We Are Still Considering Buying The Home. Do We Have A Case And What Are Our Options?

​

Location: California

Background:

My fiancé and I have been renting our home in Northern California for several years, paying a significant amount in rent total. The seller/landlord is a licensed California real estate agent. When we expressed interest in purchasing the home, she recommended we use her mortgage broker, who she has worked with many times previously. Neither disclosed their prior working relationship to us upfront or in writing.

What happened:

We engaged the broker in good faith. He obtained an initial pre-approval, then without notifying us, shopped my fiancé's application to multiple banks and obtained a new pre-approval at a significantly higher amount than our original approval. Instead of contacting us with these results, he contacted the seller first. We found out about our own loan approval from the seller, not our broker.

The evidence — all in writing:

The seller confirmed the disclosure in a text to my fiancé:

"[Our broker] ran your application through a different bank and he said they preapproved you for [higher amount] with a seller credit."

When we confronted the broker via text he admitted:

- "I am so sorry. I did not consider that."

- "She told me her bottom line price and I did my best to see if I could make that work. I made it work."

This is critical: The broker was not just passively sharing information. He knew the seller's bottom line price and actively worked backwards to engineer an approval that fit her number, without ever disclosing any of this to us. He was recommended by the seller and was effectively acting in her interests while pretending to represent us.

The conflict of interest:

- Seller recommended the broker to us

- They have an established prior working relationship admitted by both parties independently

- Neither disclosed this relationship in writing as required

- Broker knew seller's bottom line price

- Broker worked to serve seller's financial interests using our confidential financial information

- We were never informed or consented to any of this

The harm caused:

- Seller immediately hardened her position to her asking price, firm, as-is, no credits, no repairs

- Seller simultaneously issued a rent increase as additional pressure

- We had been negotiating well below asking, comparable homes in the area had recently sold significantly below the seller's asking price

- We are still considering purchasing the home but feel our negotiating position was completely destroyed by the broker's actions

- We face potentially significant costs if we cannot reach a fair price, moving, new deposits, higher purchase price elsewhere, and significant disruption to our family

Additional concern — property condition and appraisal:

The seller has been completely absent as a landlord for the duration of our tenancy. She has no firsthand knowledge of the current condition of the property. We are aware of several significant issues that would require substantial investment, potentially $30,000–$70,000 in work, that she has explicitly stated she will not address or credit at her asking price. She is pricing the home based on what she paid in 2022, not its current condition. We are using FHA financing which requires an appraisal, and we strongly believe the home will appraise below her asking price given recent comparable sales and the condition of the property. She has stated her price is firm and we are concerned she will refuse to negotiate even if the appraisal comes in lower.

Potential violations we've identified:

- Broker's fiduciary duty to act in client's best interest — violated

- Gramm-Leach-Bliley Act (GLBA) — financial privacy violations

- RESPA — unauthorized disclosure of client financial information

- California Finance Lenders Law — failure to disclose conflict of interest in writing within required timeframe

- California DRE ethics violations by seller as a licensed realtor

- Potential fraud and conspiracy between broker and seller

Our questions:

1. Does this constitute a clear RESPA violation given we have written admissions?

2. Do we have grounds for a civil damages case against the broker, the seller, or both?

3. What damages could we realistically recover, negotiating gap, moving costs, housing disruption?

4. Does the triple damages provision under RESPA apply here?

5. Should we file DFPI against the broker and DRE against the seller simultaneously or sequentially, and does timing matter given we are still tenants?

6. Does the fact that no purchase contract was signed weaken our case?

7. Is this considered fraud or conspiracy given both parties independently admitted their working relationship?

8. What is the statute of limitations we need to be aware of?

9. If the home appraises below asking on FHA financing can she legally refuse to negotiate and what are our options at that point?

10. Should we proceed with the purchase given everything that has happened or does this situation give us any additional leverage?

We have all text message screenshots saved and timestamped and are planning to consult a local real estate attorney.

We are not looking for this to replace legal advice, we understand we need an attorney. We are looking for general guidance on the strength of our case and what to prioritize.