In a case that could set a precedent for participants in warehouse loans that go sour, a subsidiary of Chase Manhattan Corp. has been sued for allegedly poor monitoring of a $185 million line of credit to a failed Michigan mortgage company.

Guaranty Federal Bank of Dallas claims that Chase Bank of Texas "failed in a number of respects to fulfill its duties and obligations" as warehouse agent and collateral custodian in the syndicated warehouse line for MCA Financial Corp. of Southfield, Mich.

Limited Time Offer

Save $400 off your subscription. Special offer ends April 30, 2017.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.