Legal Blog

Compensation and Compliance Matters: And the Fraud Claims Keep Coming…

Bank Manager ReimbursementsThe United States Department of Justice’s successful attempt to prove fraudulent conduct in connection with alleged shoddy origination practices against Countrywide has spurred copycat lawsuits against lenders. The latest is a claim against Royal Bank of Scotland, who did not even originate the loans in question, but was allegedly aware of the poor origination practices associated with the loans securitized and sold. RBS’s attempt to obtain dismissal of the fraud claims was rejected, thus bolstering the trend of lawsuits successfully alleging fraud based upon allegedly sub-par origination practices. It appears that a lender whose practices fall below an unwritten standard of care are increasingly likely to face fraud claims, and the multi-million dollar penalties associated therewith. This is particularly true when it comes to underwriting. Click here to read the rest of the article.