Key keywords: Cape Cod homeowner mortgage lawsuit, $5.5M Cape Cod mansion collapse risk, coastal property erosion Massachusetts, bank improper mortgage approval claim, bluff retreat property risk, mortgage lending due diligence dispute, Chatham MA uninhabitable property A Cape Cod, Massachusetts homeowner has filed a high-profile lawsuit against a national mortgage lender, alleging the bank acted negligently by approving a $5.5 million home loan for a cliffside mansion that was already at severe risk of imminent collapse due to chronic coastal erosion. The 6-bedroom, 7-bathroom waterfront property sits on a rapidly eroding glacial bluff in the town of Chatham, one of Cape Cod’s most desirable coastal communities. Public geotechnical records filed with the town show the bluff has been retreating at an average rate of 1.8 feet per year for the past two decades, and prior to the home’s 2023 sale, a 2022 town assessment had already flagged “significant structural stress” to the home’s foundation, including 3-inch wide cracks in the basement slab and a 2-inch outward shift of the home’s eastern exterior wall, which sits fewer than 20 feet from the bluff edge. The plaintiff, who purchased the home as a primary residence, claims in court filings that the bank failed to conduct required due diligence to verify the collateral value and structural safety of the property before approving the 30-year fixed mortgage. He alleges the lender only ordered a standard desktop appraisal that did not include a targeted geotechnical risk assessment, even though the property’s coastal location made erosion-related structural damage a predictable, well-documented risk in the area. Six months after the closing, the Chatham Building Department issued an immediate occupancy ban for the property, declaring it “unfit for human habitation” and warning that a single major winter storm could trigger full bluff collapse and send the entire home into the Atlantic Ocean. The homeowner is now seeking to have the mortgage fully voided, as well as compensation for moving costs, temporary housing expenses, legal fees, and the $800,000 down payment he put toward the purchase. The case has sparked widespread debate across the U.S. real estate and lending industries, as rising sea levels and accelerating coastal erosion put millions of dollars worth of waterfront property at risk of becoming uninhabitable or uninsurable in the next 10 to 20 years. Legal analysts note that if the homeowner prevails, the ruling could force all mortgage lenders to implement mandatory geotechnical risk assessments for all properties located in erosion-prone coastal zones, a change that would significantly raise closing costs for waterfront home purchases but also reduce the risk of lenders being left with worthless collateral after a property collapses.