By Mark C. Horton, second vice president and national director of community banks, bond and financial products business unit, Travelers Insurance
The housing crash caused a record number of foreclosures, putting lenders at greater risk of counterclaims by borrowers. Although some counterclaim suits are simply attempts by the borrower to stall the foreclosure process, many times that is not the case, which means lenders typically have to mount a costly defense until the merits are further determined.
The number of counterclaims being filed, the potential liability banks face, and the need for a strong defense all underscore the need for appropriate insurance coverage. Current conditions provide an opportunity for agents and brokers to work with carriers to offer expertise and advice to help their clients at community banks, credit unions and other financial institutions address counterclaim exposures and solutions.
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