Being that a domino fallout of predatory lending class-action lawsuits is likely to ensue if any one of them succeeds, most concerned parties, particularly the investment banks that underwrote the deals, are wondering if there is some basis for extending the liability for the abuses to the enabler of the loan.

Legally, for a case to be made that an underwriter is liable, the plaintiff would have to prove that the underwriter was fully aware of the predatory activities and the implications of the predatory activities, according to Dan Castro, head of real estate ABS research at Merrill Lynch.

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