We are seeing more and more challenges by borrowers to swaps. No big surprise since, with falling interest rates over the past few years, the borrowers are on the wrong end of the transactions. Although swaps are considered independent of the loans, they are often secured by the same collateral and are usually crossdefaulted with the loans, so the obligations that arise from early termination (which can be significant) become part of the collection process and are being fought vigorously by borrowers. The usual claim is that the borrower was duped into the swap contract by shady practices of the bank. These claims were made to the court in TD Bank, N.A. v. 158 Wooster Street, LLC, 2010 NY Slip Op 31869U, NY App. Div. (July 12, 2010), and rejected. In Wooster Street, the bank started a mortgage foreclosure action against the borrower and included the swap termination amount in the action. The borrower claimed that it did not understand the swap transaction and that the bank caused it to enter into “an unnecessarily complex financial transaction.” The court concluded that the fact that the borrower overextended itself is not a basis for negating the swap termination obligation, especially when it was represented by an attorney at closing.