Borrower sued for not paying loan for rescinded property sale

A now-insolvent company owned by two sisters purchased property in Pasadena, Calif. After receiving their loan, the seller rescinded the sale. The sisters failed to inform the lender, continuing to pay the required interest-only payments on the loan for six years. The lender began foreclosure proceedings and discovered the sale had been rescinded. After settling with the title insurer, the title insurer sued the sisters for breach of contract and fraud.