Sample Cases Descriptions

Bank handling of non-negotiable collateral
Issue: whether the bank, in accepting certain non-negotiable collateral, utilized proper practices to safeguard the collateral while in its possession before returning it to the borrower.

Loan terms on credit extended by a non-traditional lender
Issue: whether lending standards were appropriate when credit was not available from traditional banks due to difficulty in determining underlying collateral value and uncertainty in projecting cash flow within a reasonable time period.

Prudent SBA loan underwriting and servicing standards
Issue: whether the bank followed Preferred Lender standards in making/servicing an SBA-guaranteed loan to an unsophisticated borrower.

Loan approval to fund a portion of a construction project
Issue: whether the bank acted properly in approving a credit facility that provided funds to complete most of a project, then declined to advance sufficient additional funds to enable completion.

Release of credit information to a vendor
Issue: whether the bank acted in good faith in discussing the borrower’s lack of compliance with one loan covenant but failing to disclose other breaches in the agreement.

Bank and attorney responsibilities
Issue: whether attorneys representing the bank had properly performed their duties in properly researching and perfecting the lender’s security interest in collateral that supported sizable loans to a borrower.

Application of residential mortgage payments
Issue: whether the mortgage servicer acted properly and consistently in its 1) default notification, 2) decisioning on accepting/rejecting payments after default, and 3) application of payment proceeds on the borrowers’ obligation to the lender.

Wire transfer services activities
Issue: Whether a bank handled wire transfer requests in accordance with its written policies and procedures in a manner consistent with its obligations to do so, and would bear the risk of loss if security procedures were not met.

Intercompany loan conformity with commercial banking standards
Issue: whether intercompany loans contained preferential terms that would have been available from a disinterested third-party commercial lender or investment banker.

Commercial Credit Underwriting
Issue: Whether the bank performed a satisfactory corporate credit analysis while underwriting/approving a multi-million credit facility in a dispute with a CPA firm that issued the borrower’s audited financial statements

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