Professional Negligence: Same horse, different rider?
The fallout from the subprime crisis which began in the US is rarely out of the news. As lenders keep an anxious eye on their loan books, there are dire warnings of a property crash. Minds are inevitably cast back to the early 1990s, when the last crash resulted in a flood of claims against solicitors, valuers and brokers arising out of mortgage fraud and professional negligence. Many professionals and their insurers will be monitoring the current situation, since experience shows claims against professionals are likely to follow if the anticipated crash occurs, as lenders look to recover their losses. A rising property market, such as has prevailed in the UK for a considerable period, can mask a number of ills. In particular, mortgage fraud is less likely to cause problems (if it comes to light at all) in a rising market, where a lender can recoup the value of the secured property. Once the value of properties starts to fall, however, it is more likely there will be insufficient equity in the property to recover the sum advanced and related charges. This is when short-changed lenders begin to scrutinise the work undertaken by professional intermediaries.
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