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26
Aug
2020

Credit Union Liability: Failure to Payoff Lien

Here, Progressive Credit Union was held liable for more than $158,000.00 when the credit union granted a secured loan to a member and did not pay off a prior lienholder.  The appellate court found the credit union liable to the former lienholder.

When Progressive Credit Union granted this loan, it searched the county and state lien records and discovered a Uniform Commercial Code Financing Statement filed on the borrower’s collateral that secured an interest of a previous financer.

Notwithstanding the credit union’s actual knowledge of the lien, Progressive did not pay off the prior lender. Instead, Progressive assumed that the borrower would pay the prior lien; Progressive issued the new loan proceeds check without being made payable to the member and the prior secured lender.

The credit union member absconded with the loan proceeds and did not pay off the existing lien.

Although the trial court found in favor of the credit union, the appellate court reversed the trial court ruling and found that judgment should be entered in favor of the former lender and against the credit union. This credit union’s negligence has resulted in more than $158,000 of liability to the former lender. Fleet Credit Corporation v. Progressive Credit Union, et al., (New York Supreme Court-Appellate Division, No. 48109).

Author: Charles R. Harroun, Attorney at Law



This entry was posted on Wednesday, August 26th, 2020 at 4:33 am and is filed under Mortgages, National, Secured Loans. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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