lender liability definition

lender liability

US legal doctrine under which a lending bank may be held liable for a borrower's financial losses that are directly or indirectly related to the bank's actions. A bank is potentially liable for (1) loans made in bad faith, (2) refusing to advance new loans or credit extensions after promising to do so, (3) taking a controlling interest in the borrower's business, or (4) foreclosing on borrower's assets without proper procedure and notification.

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