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BANK LAWSUITS - "bigger than Enron"

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Mike Kennedy

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Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
http://business.timesonline.co.uk/tol/business/law/article3155677.ece


January 9, 2008


Banks set to fight back against sub-prime law suits

Investment banks are facing a wave of litigation bigger than the Enron scandal but are unlikely to roll over this time, lawyers said.


Traditionally, an investment bank selling a complex financial instrument to a sophisticated investor will include a non-reliance clause in any deal, which says the investor can only rely on the information given in the final contract rather than anything said during the sales process.

This has led to accusations that commission-based sales staff have exaggerated the safety or suitability of products, safe in the knowledge that their employers cannot be held liable for what they have said.

But in a recent landmark case, a judge ruled that the institution selling a financial product can invoke a non-reliance clause only if it can prove the buyer did not rely on anything said by sales staff up to the point it signed the contract.

Lawyers believe the case — Quest 4 Finance Limited v John Maxfield and Others — has opened up a new front for investors to sue banks that could leave the banks facing vast losses.
 
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Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
Time for the Forensic Appraisers to get in line!

Wait till someone points out the guarantees signed by the banks about not having any knowledge about the appraisal report and appraiser's digital signature being compromised!!!!!
 

Caligirl

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Joined
Jan 27, 2006
Professional Status
Certified General Appraiser
State
California
Anyone else think that MBs have been put in place to take the fall this time?
 

Scott Kibler

Elite Member
Joined
Oct 7, 2003
Professional Status
Certified Residential Appraiser
State
Illinois
I got a rebuttal on a field review I did over a year ago. Review is associated with a loan default. I was talking with the client about it and commented that was the first rebuttal in well over a year. She was saying that the lenders (and their Wall Street parents) are starting to dispute denied claims more vigorously.

Maybe writing letters rebutting rebuttals will become a nice revenue stream.
 
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