Banking Expert Witness Case Study-Philadelphia

Darby V. Rahman et al, Philadelphia, Pennsylvania  US Eastern District April 2010  

expert witness for banking cases

Banker/Borrower Lawsuit

Gloria Darby applied for a loan. The money was to be used to acquire the house from the
landlord where she lived.

The bank was promoting loans aggressively, and did not require a title
search or title insurance, which is a normal procedure when buying real estate. The bank was
unaware of a prior mortgage existing on the property. Because it wasn’t discovered, the prior
mortgage was not paid at the closing. The same bank, Wachovia held both loans, and began
foreclosure upon the house because of the unknown defaulted mortgage. Meanwhile, the
borrower, who had faithfully made all the payments on her new loan, wondered what was
happening.

Law Firm Engaged Banking Expert Lee Tabas

Gloria Darby’s law firm engaged me as a banking expert.

I haven’t seen any court opinions as to whether bankers have a duty to protect “salt of the earth”
customers. Gloria Darby worked at the sports stadium, and knew nothing about mortgages-
she had been a renter up to that point. She was dependent upon the better knowledge and
judgement of the bank.

Rather than advise her properly, Wachovia requested that the borrower
sign a disclosure document that she was aware that no title insurance was required. This matter
was settled without going to court. That would be banks’ inclinations in most cases, wanting to
avoid bad publicity.

I believe that banks do have a fiduciary duty to their “salt of the earth “customers. For the basics,
banks must put their customer’s interests above their own. I think we will see continued
reinforcement of that position going forward.

As an experienced business owner, banker, bank president and commercial lender, Lee Tabas of Tabasfunding in Haverford, Pennsylvania also provides law firms with expert testimony in lawsuits. Mr. Tabas can be reached at 610-896-2400