In the largest multistate agreement since the tobacco settlement of 1998, the Obama administration, along with 49 state attorney generals, announced a $25 billion settlement with five of the nation's largest banks. In addition to instances of wrongful foreclosure and fraud, the government's investigations found that banks routinely violated the law through improper practices, signing foreclosure documents without a notary or without knowledge that the documents were factual. 

What implications does this landmark case have for credit unions? It's true this settlement involved large banks and not credit unions. However, the conditions precipitating these events have yet to improve.

According to the NCUA, foreclosure and repossessions at NCUA-insured credit unions, which peaked in 2011, remain at elevated levels. It's reasonable to assume that this activity will continue to put credit unions at increased risk for claims relating to their lending practices when loans go bad. Further, headlines generated by big cases like the one above are likely to grab the attention of troubled borrowers, who may feel empowered to investigate and file claims against their own financial institutions.