A recent First Circuit opinion illustrates some of the headaches that professional liability insurers may face as the result of malpractice claims arising out of the sub-prime mortgage crisis and the current troubles on Wall Street.
At issue in New Fed Mortgage Corp. v. National Union Fire Ins. Co. of Pittsburgh, PA, No. 07-2762 (1st Cir. September 30, 2008) was the availability of E&O coverage for a suit brought against a mortgage originator for losses suffered by a bank that had approved mortgages based on false credit information supplied by the insured.
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