Lender Liability: Fifteen Steps to Safety

Fifteen steps are proposed to safeguard lender liability. They include: 1. Reduce statements of authority to writing. 2. Clearly define the expiration date of the loan commitment. 3. Provide that any modification of a condition be in writing. 4. Clearly and completely define the conditions to closing set forth in the commitment letter. 5. Include a clear arbitration or jury waiver provision in the loan agreement. 6. Make sure the borrower is represented by competent counsel. 7. Act in a professional, civil manner toward the borrower. 8. Maintain an accurate record of communications. 9. Review policy manuals and loan approval memos. 10. Do not issue warnings or threaten to take action unless intending to do so. 11. Do not try to control the management and operations of the borrower. 12. Give reasonable notice before ceasing the advancement of funds. 13. Include an integration clause when demanding a provision stating that the writings contain the entire agreement of the parties.