I can't see any gain for a realtor to "Lie" about a home being in Foreclosure. I can understand not knowing if it has gone "into" foreclosure. I don't understand the premis of doing an inspection at this time. There is a period of time during foreclosure the owner of title has the right to "pay up and make current". There are also delays in the final foreclosure since the Banks nees to determine if it truly "qualified" with all the rule changes. When a house is going to Auction, they have there own quidelines for inspections, typically they are done prior to the sell. Was this under those conditions? As far as a lawsuit, small claims wouldn't conflict with a mortgage as long as you are the Plaintiff. Do you feel you were co-ersed into inspections and couldn't say "No" to inspections? You should expound on the situation. If the Bank does take back the property, the inspections could work as an advantage for you and the Bank when/if the home is made available for purchase.