Whether it be on the sale or purchase side of the loan participation transaction,
there is an ever-increasing incident of lender liability allegations involving one
financial institution with another. Even if no wrong-doing can be proven, it
must be defended which can certainly be expensive.
Every community bank should assess their FI Bond Agreement E Securities
and Signature Guarantees. Covers loss resulting in acquiring, selling, delivering,
giving value, extending credit or assuming liability on the faith of a certificated
or uncertificated security which has been forged, counterfeited, altered, lost
or stolen. Also includes Loan Participation documents, however, physical
possession has a bearing on coverage!
Regarding Directors’, Officers’, Employees’, or Entity Liability, a lending liability,
including loan participations, may include any error, misstatement, act, omission,
neglect, or breach of duty. Are you convinced you have full protection?
Remember, loan participations, increase your professional exposures from
a refusal to grant or extend a loan, lease or extend credit. Including the actual
loan servicing by you or your participation partner! Liability is further increased
from restructure, termination, transfer, repossession or foreclosure of a loan,
lease or extension of credit.
“Professionals may be sued for either gross or simple negligence. The Supreme
Court has ruled the FDIC may pursue simple negligence claims against D&Os
if State law permits.”
Latest FDIC statistics inform $6.48 Billion from professional liability claims
were collected from 1986 through 2011. Are you really adequately insured
in your asset peer group?
Community BancInsurance Services, Springfield, IL performs complimentary
insurance reviews of your program for CBAI members. Call us today
Patricia M. Tobin, CIC, FI Specialist
Community BancInsurance Services
4481 Ash Grove, Suite B
Springfield, IL 62711