Lenders 360

News, information and commentary on important issues affecting the financial services industry

Latest from Lenders 360 - Page 2

I’ll admit it.  One of my favorite words is “allonge”.  It breaks up my otherwise decumbent register with something exotic.  Legally, it’s a way to assign a promissory note to another party who then has the rights to assert the promissory note against the obligors.  The last post discussed the importance of compliance with simple legal requirements.  But, what happens if the simple act of signing the allonge is done by an entity which doesn’t…
When things go south, it’s the little things that can get you into trouble.  When the servicer on a commercial mortgage sent the notice of foreclosure to the address on the deed of trust, but not to the known updated address of the obligors the obligors counter-sued for breach and the case has been pending now for eight years.  In a recent 5th Circuit opinion, the Court found that failure to serve the proper address…
An appeals court holding, and pending U.S. Supreme Court case, could up-end FDIC enforcement procedures.  One of the interesting recent themes in Game of Thrones is the basis for power.  In these United States, the power of judges originally comes from the United States Constitution.  And, it turns out; if you don’t follow the rules of the Constitution your Court might not actually have any power. Credit: Game of Thrones. Home Box Office, Television 360,…
Bitcoin first came into public existence in 2008 with the first coins “mined” by a person/group named Satoshi Nakamoto.  As you are probably aware, Bitcoin is a method of transferring value electronically and without the need for any money issued by a sovereign entity. The first thing to know about Bitcoin is that it is totally decentralized.  There is no master server and no bank vault with anything tangible in it.  Bitcoin exists only as…
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 might expect, some people were sued as a result.  One of those folks was the attorneys for GM.  Recently the…
Sometimes a buyer is upset because he received less than he paid for.  On the other hand, sometimes the buyer is upset because he received way more than he paid for.  In a recent Texas Supreme Court decision, the buyer of contracts out of bankruptcy realized too late that it had purchased tens of millions in liability under an undisclosed indemnity agreement which had been dormant for years. To understand what happened, it’s helpful to…
The Bankruptcy Code permits a bankruptcy trustee to “surcharge” a lender’s collateral when the cost will benefit the lender and there is also benefit to the bankruptcy estate.  The friction arises when the collateral is worth less than the lender’s secured claim plus the surcharged expenses.  In short, who is left holding the bag when the collateral is worth less than the trustee’s expenses and the secured debt?  In some ways it’s a question of…
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 against is a good example. In 2013 the Department of Justice (“DOJ”) and the Consumer Financial Protection Bureau (“CFPB”) commenced…
Like most bank defendants, Key Bank was looking for the quickest way out of a $5 million fraudulent transfer lawsuit brought by a chapter 7 Trustee.  Rather than wait to win in the standard path of arguing facts, the bank relied on the broad and powerful “safe harbor” provision of the bankruptcy code which protects certain transfers from recovery.  In doing so, the bank utilized a technical, but effective, argument to avoid the need for…
One of the many tools of the FDIC in resolving failed banks is the Extender Statute which, by its terms, replaces existing statutes of limitation under state law by a period of years.  In simple terms, the Extender Statute creates a longer statute of limitations for bringing a lawsuit on behalf of the now defunct bank.  The technical nature, and the amount in contest has led some defendants in FDIC lawsuits to argue that the…