Preferred Bank Sues Insurer Over $11M Fraud Coverage

Law360, New York (April 28, 2011, 6:30 PM EDT) -- Texas' Preferred Bank sued Travelers Cos. subsidiary St. Paul Mercury Insurance Co. on Wednesday for allegedly failing to cover an $11 million mortgage fraud against the bank.

Preferred Bancshares Inc., the holding company for Preferred Bank, wants St. Paul to pay for losses it incurred buying mortgages that a New Jersey company originated, then sold twice — once to Preferred and once to another bank.

Preferred says a so-called financial institution bond it has with St. Paul covers losses that stem from fraudulent documents, like those...
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