As we are all too aware, we are in the midst of another financial crisis, with the Great Recession not even a distant memory. The cause of the current financial crisis is a viral pandemic, and while no one seems to be claiming that banks caused COVID-19, the ripple effects of the financial strain and attempted cures may give rise to legal risk not unlike that which was seen immediately following the Great Recession. However, there are several parallels to be made and lessons to be learned from 2008 that financial institutions can apply now and avoid potential pitfalls.

In 2008, and in the wake of rapidly declining home values, the government created various programs designed to help homeowners (such as the Home Affordable Modification Program, or HAMP), as well as financial institutions (e.g., the Troubled Asset Relief Program, or TARP). HAMP was intended to aid distressed homeowners by paying lenders to reduce monthly mortgage payments. TARP was designed to keep banks operating, restore economic growth and mitigate foreclosures during the financial crisis. However, some homeowners and borrowers asserted claims against financial institutions, essentially asserting a violation of HAMP and TARP on the grounds that the financial institution purportedly did not offer enough by way of loss mitigation.