Subprime Lending Litigation: Is There Insurance Coverage?

A sudden, but unsurprising wave of bankruptcy filings within the subprime lending industry is now spawning private litigations and government investigations. The targets of these actions are not only the insolvent lenders, but the third party financial institutions, including their directors and officers, that purchased the subprime loans and then ‘‘repackaged’’ the lenders’ portfolios. Whether your organization is the fl
oundering subprime lender or the bank that assumed these ‘‘second chance’’ loans, the next question becomes: will your directors and officers (‘‘D&O’’) or professional liability (‘‘E&O’’) insurance policy ‘‘protect’’ you from these actions?