After losing money in your investment, you may wonder if you can recover losses from collateralized mortgage obligations. You may be able to recover losses if you worked with a financial advisor who was negligent.
A collateralized mortgage obligations investment loss lawyer can help you understand what losses you may be eligible for. Read on to learn more about the losses you may be able to recover from a collateralized mortgage obligation.
What are Collateralized Mortgage Obligations?
Collateralized mortgage obligations (CMOs) are an investment product composed of a pool of several different mortgages. The homeowners will make the mortgage payments, and the payments will go to the investors in the CMO. Even though you are paying to invest in the pool of homes, you don’t own any property.
The pools of homes are split up into different tranches based on the amount of risk and priority of mortgage payments. When you invest in a CMO, you can choose the risk and return level you want.
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Why Do Investors Lose Money in CMOs?
The main reason you may lose money in a collateralized mortgage obligation is that the homeowners stop paying their mortgage payments when they default or foreclose their home. When you invest in a CMO, the homeowners don’t know that their mortgage is being invested in.
Additionally, CMOs can also be sensitive to changes in interest rates or prepayments, which may cause losses even if borrowers don’t default.
Another common reason you may lose money in a CMO is because of poor advice from your financial advisor. Your advisor may have underestimated or may not have known the risks of CMOs. If you worked with a financial advisor, our team can help you recover losses from a collateralized mortgage obligation. If you didn’t, unfortunately, we will not be able to help you.
Common Types of Advisor Misconduct With CMOs
When it comes to collateralized mortgage obligations (CMOs), financial advisors have a duty to act in their clients’ best interests. Unfortunately, some advisors engage in misconduct or negligence that can lead to significant losses.
Below are some of the most common ways this happens:
Suggesting Unsuitable Investments
CMOs are often complex and risky, making them inappropriate for many investors. If your advisor recommended CMOs without considering your financial goals, age, income, or risk tolerance, they may have acted negligently. Placing you in an investment that doesn’t align with your needs is a red flag for unsuitability.
An unsuitable investment can expose you to higher risks than you intended to take, especially if you were looking for safer or more conservative options. Advisors are expected to match your investments with your profile, and failing to do so can result in unnecessary financial harm.
Unauthorized Transactions
Your advisor should always get your consent before buying or selling investments in your account. If you notice trades involving CMOs that you never approved, this could be a case of unauthorized trading. Such actions not only violate industry rules but can also expose you to losses you never agreed to take.
Unauthorized activity not only undermines your trust but also creates financial risks you didn’t agree to assume. Even if the investment itself is profitable, the lack of approval makes the transaction improper and a potential violation of your rights as an investor.
Misrepresentation of Costs
CMOs often carry hidden fees, commissions, or risks that should be fully disclosed. If your advisor downplayed the expenses or risks tied to these investments, or made them seem safer than they really are, that could be considered misrepresentation. You have the right to clear and accurate information before making an investment decision.
When an advisor misrepresents or withholds this information, you may end up paying more in costs or taking on greater risks than you realized. This lack of transparency can distort your decision-making process and lead to losses that could have been avoided with honest communication.
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What Types of Compensation Can You Recover?
If you lost money in a collateralized mortgage obligation (CMO) because of poor advice from your financial advisor, you may be eligible to recover several types of compensation. The most common recovery from collateralized mortgage obligations is the actual money you invested and lost.
You may also be able to recover the returns or interest you reasonably expected to earn if your money had been invested appropriately. For many investors, these lost earnings can be just as significant as the original investment loss. In some cases, additional damages may be awarded if the advisor acted fraudulently or intentionally misled you.
Compensation can also include covering the costs associated with bringing your claim, depending on the rules of the forum where your case is heard. A lawyer will review your case and explain what types of recovery are possible based on your unique situation. Our goal is to maximize the amount you recover so you can move forward with greater financial security.
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How a Collateralized Mortgage Obligation Lawyer Can Recover Losses
If you invested in collateralized mortgage obligations through a financial advisor and lost money, a lawyer can determine whether your advisor acted negligently. A lawyer reviews the details of how the investment was sold and whether proper disclosures were made.
A CMO lawyer also guides you through the process of recovering your money. This often involves filing a claim through the Financial Industry Regulatory Authority (FINRA), which oversees disputes involving advisors and brokerage firms. Depending on your situation, the lawyer may also pursue arbitration, regulatory complaints, or settlement negotiations.
Your lawyer will collect and analyze important evidence, such as account statements, emails, and advisor communications. They use this information to build a case showing how unsuitable advice or misrepresentation led to your losses. By handling the legal work, a collateralized mortgage obligation lawyer helps you focus on moving forward.
Learn More About Recovering Losses From Collateralized Mortgage Obligations
At Meyer Wilson Werning, our team is ready to help you recover losses from collateralized mortgage obligations if you lost more than $100,000. We can help you answer any questions you have about your situation.
Contact us for a free consultation and learn more about recovering losses from your CMO investment.
Recovering Losses Caused by Investment Misconduct.
