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Home >> Lending
Fraudulent Loan, but Bank Refuses to Cooperate
If anyone has advice on this please help. I own a brokerage company and we executed a loan for a customer and it ended up that the loan was fraudulent. We had already issued the loan proceeds when we found out. Since then, we have contacted the real customer and helped her get fraud alerts on her bureaus, etc. The good news is, we issued the check to the dealer so that when the fraudulent customer tried to deposit the money, the bank froze all proceeds because they recognized the customer as fraudulent.
We are trying to get our money back and the bank that has the money wants our bank to sign a hold harmless agreement, and then they will return the funds to our bank immediately. They will not deal with us because it was a cashier's check from our bank. Our bank refuses to sign this agreement. What can we do to recover our funds, and is our bank wrong to not sign the hold harmless agreement because the other bank says this is standard procedure?
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 It seems to us that all the parties want to unravel this mess, but no one wants to risk any liability. This situation seems worthy of investing some time of each of the banks' management in a discussion of the pros and cons of a hold harmless agreement, perhaps with some legal guidance. Your company will need to push for this, because you're the folks that are out the funds until the unraveling is completed. If you cannot overcome the natural inertia of the banks to move, you may have to review your legal options.
Published on BankingQuestions.com 7/03/09
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