Avoiding and Mitigating Lender LiabilityOccasionally, our financial institution and commercial lending clients face lender liability claims from their borrowers. Many borrowers believe that they should not be held fully responsible for repaying the indebtedness due under their loan agreements, and they will engage in efforts to avoid their obligations. Our attorneys are experienced in addressing the legal issues raised by these borrowers. These claims may include allegations that the lender violated its duties and obligations (contractual or implied), allegations that the lender has assumed control over the borrower invoking fiduciary duties, wrongful foreclosure claims and other lender liability claims, including:
- Wrongful refusal to renew loans or fund loans
- Wrongful refusal to honor loan commitments or alleged deals that are not clearly documented
- Negligent processing or administration of loans
- Threatening enforcement actions that cause the borrower to act against its interests
- Selling borrowers' collateral for under fair market value
- Misrepresenting borrowers to other creditors or credit bureaus
- Interfering with borrowers' business operations or relations with third parties
- Improper foreclosure procedures
Our lawyers' involvement with your lending team can begin with your lending strategies, principles and document preparation. We help protect clients against claims of contract breaches and lender misconduct at the inception of a lending relationship. Our attorneys in both Dallas and Houston possess considerable experience responding to and litigating against lender liability claims in Texas.
It is critical for lenders to retain comprehensive records, separate the work of loan officers and workout officers, follow financial privacy laws, honor all qualified commitments and avoid guiding borrowers' financial decisions too closely.
In the event of loan defaults, we counsel clients regarding collection options and strategies and in . many of these areas, we can handle interactions with borrowers directly on your behalf, including:
- Loan workouts
- Loan modifications
- Forbearance arrangements
- Collection lawsuits
- Dispositions of collateral
Loan Document Preparation and Portfolio ManagementIt is extremely important to properly prepare and finalize loan documentation with experienced legal counsel. Breach of a written commitment or not clearly stating exactly what has been agreed to in a commitment letter can open the door for a court to conclude that a lender knowingly misrepresented a clause or condition of the loan to the borrower or that the lender attempted to achieve a fraudulent or unfair result from the loan. Such fraud and breaches of duty expose defendants to substantial damage payouts, which may exceed the borrower's actual damages, if certain federal statutes are found to have been violated.
We help domestic banking and commercial lending clients structure loans and prepare documentation for transactional work throughout the U.S., working from out offices in Houston and Dallas with institutions across Texas. Our attorneys include leaders in the industry. We can guide your team through loan document structuring, preparation, modifications, assignments, amendments and renewals. We will work to assure you of your business’s strong positions and asset protection in all deals.
From compliance with all state and federal laws to acquisition financing to guaranties to construction loans to lines of credit, we can assist your firm in the management of your full portfolio of commercial loans. Our attorneys are thorough, informative and committed to risk mitigation, strategy formation and litigation.