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11 The Liabilities of a Secured Lender to Borrowers and Third Parties

From: Principles of Lender Liability

Parker Hood

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved.date: 30 May 2024

Banker-customer relationship — Secured lender selling asset at an undervalue — Mortgage — UK Financial Services Authority (FSA) — Counterclaims
11.01 In terms of lender liability, the central problem for a lender, in (i) England and Wales, and/or (ii) Scotland, who has security1 over an asset, is that, when the borrower defaults, and the secured lender, in order to recover the debt due and owing, exercises its power of sale in relation to that secured asset,2 the asset is sold at an undervalue, with the secured lender being required to make up the shortfall between what was realized and what should have been realized. The consequences of such a sale at an undervalue are, first, that the amount recovered...
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