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Category Archives: Lender Liability

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Two Lawsuits Diverge and I take the Defendant Less Liable

Posted in Collection, Lender Liability, Tough Times for Lenders, Workout Issues

To paraphrase Count Ciano, Success has many fathers and failure has many targets.  You may recall a while back I wrote about how a loan to old General Motors (worth $1.5 billion) was accidentally rendered un-secured.  When GM entered bankruptcy, the loan was ultimately determined to be unsecured and lenders (presumably) lost billions.  As you… Continue Reading


Posted in Lender Liability, Tough Times for Lenders

Sometimes government regulators do funny things.  Sometimes their actions reflect that they are non-economic actors, sometimes its political, sometimes its bureaucracy and sometimes there is just no reason at all because no one knows who made the original decision. The recent Ally Bank borrower discrimination settlement in which no one knows who was actually discriminated… Continue Reading

The Plaintiffs Suing the Lender May Not Exist At the Time the Loan Documents Are Signed

Posted in Lender Liability, Tough Times for Lenders, Workout Issues

It is often surprising to me how often people are unaware of the fairly high risk of being sued in connection with a chapter 11 bankruptcy case when there is money in the case.  Many times, non-debtor parties’ falsely comfort themselves with the belief they will not be sued because existing management wouldn’t want to… Continue Reading

JPMorgan Requests Rehearing Following Loss of Secured Status of $1.5 Billion Loan following “Clerical Error”

Posted in Lender Liability, Tough Times for Lenders

It’s an old saying that lessons are expensive and good lessons are really expensive.  A recent 2nd Circuit Case provides a good lesson on attention to detail and, unfortunately, it is also a really expensive lesson to JPMorgan and their attorneys.  In the 2nd Circuit’s recent opinion, the Court determined that a UCC3 (termination statement)… Continue Reading

No Good Deed Goes Unpunished When Accepting Payment from a Non-Borrower on Behalf of a Borrower

Posted in Guaranty Issues, Lender Liability, Tough Times for Lenders

I have found this to be true over and over again.  Maybe it’s just my line of work. Part of my regular practice is being called in by the transactional lawyers (paper pushers) as they paper up a new loan or re-fi.  My job in those situations is to give my thoughts on what will… Continue Reading

Sticks and Stones May Break Your Bones, but Reliance Waivers Can Still Hurt You

Posted in Lender Liability, Reps & Warranties, Tough Times for Lenders, Uncategorized

Last week Regions Bank sued Comerica Bank seeking a declaration that Regions is not liable to Comerica in connection with their $53MM syndicate loan to a plant nursery that went very wrong.  Regions Bank v. Comerica Bank, civil action 3:14-cv-3607, pending in the United States District Court for the Northern District of Texas. In short:… Continue Reading

Chilling Questions: Will Suits By RBMS Investors – Spill Over to CMBS? Encourage CMBS 2.0 Transparency??

Posted in Lender Liability, Market Trends, Tough Times for Lenders

I have asked these questions before – with respect to the US Government suing several home lenders: should commercial lenders be concerned? will CMBS 2.0 give investors needed loan level information? In a rough sense, the first bullet is a new form of "lender liability." On Monday and Tuesday of this week, I was in… Continue Reading

US Gov Sues Several Residential Home Loan Lenders: Should Commercial Lenders Be Concerned?

Posted in Lender Liability, Market Trends, Tough Times for Lenders

You might have missed this interesting event earlier this week: the Justice Department sued Deutsch Bank and Mortgage IT  alleging fraud in the origination of home loans (in a FHAHUD loan program). If you really want to jump into the case, attached is a copy of the Government’s pleading in the case. Why my interest in… Continue Reading

Lender Liability Returns – As “Lender Responsibility”

Posted in Lender Liability, Market Trends, Tough Times for Lenders, Training

Early in this economic down turn, Steve Cocheo with the ABA Banking Journal reported that lender liability had returned but with a focus on the (alleged) failure of the bank to fund or follow though on its contractual obligations. In other words, a simple breach of contract or breach of a duty (such as duty of good… Continue Reading

When a Workout Morphs into Litigation: Everything is Personal

Posted in Lender Liability, Tough Times for Lenders, Training, Workout Issues

Recently, I’ve listened to this comment from several people who handle distressed commercial real estate loans at banks: “Well, we thought that we would avoid being personally named in a law suit on one of these bad loans. But no. We’re starting to be sued. And the suit names me . . .  personally.” I’ve ventured over to… Continue Reading

Need a Decision Tree and Short List of Key Topics for Your Next Workout? Try these. (Blogging after ACMA)

Posted in Guaranty Issues, Insurance & Environmental Risks, Lender Liability, Remedies, Tax Issues, Tough Times for Lenders, Training, Workout Issues

  The second day of seminars, at the annual meeting of the American College of Mortgage Attorneys, had two key take-aways for me.  The first nugget focuses on the Dodd-Frank financial law. The second nugget (below) is much more practical.  Inspired by comments made by Jim Allen during a panel presentation (he’s with the Miller Canfield… Continue Reading

The Ox and the Ditch: FAQ – Understand the Borrower; Lender Liability

Posted in FAQs, Lender Liability, Tough Times for Lenders, Training

This is a special series of blog entries in which we provide some quick answers to lenders’ frequently asked questions (FAQ).  Two things should be kept in mind.  First, none of these questions can be answered in a vacuum.  Questions should be considered with a thorough review of the file and an interview with appropriate loan… Continue Reading

Lender Liability: Lender Suing Lender – The “New” Reality?

Posted in Lender Liability, Tough Times for Lenders

The Zerohedge Blog [link] reports on a NY state court filing related to the high-profile Extended Stay Motel bankruptcy case. Zerohedge focuses on the hedge fund involvement in the case. I view it as the beginning of the lender liability battles between classes of lenders. Over the past several months, we’ve been giving presentations to our clients… Continue Reading

Watch For Change at the Court House: Impossibility of Performance

Posted in Lender Liability, Market Trends, Tough Times for Lenders

In a prior posting, I mentioned the need to watch for local legislative and regulatoryadministrative trends or changes.  But don’t forget to watch for changes at the court house, too. We’ve been watching, waiting and even researching this one: an assertion that Borrower would pay at maturity of the commercial mortgage loan, except that the credit crisis… Continue Reading

What workout topics interest you? Any inside scoop?

Posted in Guaranty Issues, Lender Liability, Remedies, Tough Times for Lenders, Training, Workout Issues

Once a month, our regular group of authors discuss topics that we view as being of interest (the "hot" topics) in the commercial loan workout arena.  We then hash out a list of what we’ll write on for the next month. Identifying "hot" workout topics can be a dangerous thing for lawyers.   Yes, we – are active in… Continue Reading

Lender Liability Returns

Posted in Lender Liability, Tough Times for Lenders

In difficult economic environments, judges and lawyers struggle with balancing legal rights and stressful economic conditions. Historically, lending relationships contain contractually agreed duties with minimum statutory requirements. However, the stress of the economic conditions has caused imaginative lawyers and sympathetic judges to apply tort causes of action in contractually agreed relationships – sometimes referred to… Continue Reading