Insurance Law Commons^™

Banks And Banking- Housing And Home Finance - Scope Of Insurance Coverage Of Banks Under National Housing Act, Robert L. Mclaughlin

Michigan Law Review

Borrower executed a promissory note to dealer payee, who assigned it to defendant bank. After default by borrower, plaintiff United States paid to defendant the unpaid balance in accordance with the terms of their insurance contract under Title I of the National Housing Act. The note was then transferred to plaintiff for collection. In an action by the United States against the borrower for the amount due, it was held that the note could not be enforced because of fraudulent misrepresentation by the dealer in acquiring the note, of which the insured bank and transferee government had constructive knowledge. Plaintiff …