Under a letter of credit transaction, "the buyer . See id. . B 9, 25, 32, 34, 36; C 16, 68. Just as the CDs in Liberty Nat'l purportedly represented a bank's promise to repay money to a depositor, the notes in this case purportedly represented a mortgagor's promise to repay a loan to Amerifunding. ; Pl. Bank v. Progressive Cas. Id. Michigan, Southern Division.
On the other hand, Flagstar's cases seemingly stand for the proposition that coverage is available where a forged document caused the lending institution to enter into the fateful transaction. The Bond was modeled after the Standard Form 24 Financial Institution Bond, which is promulgated by the Surety Association of America ("SAA"). Federal argues that Flagstar's loss did not result from the forgeries, but from the fact that the underlying transactions represented by the notes never took place, rendering Flagstar's collateral worthless. at 864.
having a Credit Value not less than the amount of the Requested Advance." Co., 538 S.E.2d 764 (Ga.App.
. expected to be mailed out. Based on the evidence presented, the Court concludes that there is no genuine issue of fact that Flagstar's collateral had no value. Net interest margin decreased 3 basis points to 2.66 percent for the first quarter 2016, as compared to 2.69 percent for the fourth quarter 2015. Site by, Heres why some lenders choose IPEN over RON, Lunch & Learn: The battle against margin compression, John Burns: how to prepare your business to excel in a mortgage cycle, Warehouse lenders stung by FGMCs bankruptcy, How auction buyer data foreshadows housing market shifts, Purchase mortgage rates rise ahead of Federal Reserve meeting, In a bad mortgage market, these are areas of opportunity for lenders, Logan Mohtashami to lead housing super session at HW Annual Oct. 3-5. However, as will be discussed below, the underlying mortgage transactions never took place and the promissory notes Amerifunding submitted in order to procure advances bore forged signatures. . . On two occasions the plaintiff obtained documents, purportedly from the credit union, that confirmed the account balance and that the credit union would hold it subject to the plaintiff's control. is . The fact that the documents also contained a forged signature does not alter the reality that the promises to pay money represented in the notes or CDs were not real. Specifically Federal did "not believe that the alleged forgeries [were] the cause of the loss." See Def. In light of the resolution of the current motion, Flagstar's outstanding motions are moot and are HEREBY DENIED. See id. See id. at 444). Your email address will not be published. .
." The Rogue I had to pay for a something that caused a clicking sound in it, the price was $78.00, at Nissan in Valdosta, GA. PRO. IX 313 (1994) (stating that a CD constitutes, in effect, a promissory note, creating a debtor/creditor relationship). 2004). Id. According to the banks website, Flagstar Bank is a top 20 mortgage servicer, handling over $73 billion in home loans for almost 360,000 borrowers. With the company match it is really like your deductible is only $2,000. At the end of the third quarter, Flagstar also had $41.7 billion in owned mortgage servicing, a decrease of 10% compared to the same period of 2020. at 861. However, the court could not say that the plaintiff's loss did not result directly from the forgeries and provided no analysis of the causation issue.
( See id. While a promissory note tends to be made by an individual, CDs are made by banking institutions. Required fields are marked *. 's Ex.
According to the regulator, the bank violated the FDPA to make, increase, extend, or renew loans secured by properties in special flood hazard areas until after it obtained proof of adequate insurance. . Therefore, pursuant to E.D. Maintenance of this distinction requires that the Bond not be construed in such a way as to provide coverage for credit risks such as the risk that collateral for a loan turns out to be worthless. Thus, just as in Liberty Nat'l, Georgia Bank, and KW Bankshares, even though the notes may have induced Flagstar to advance funds, the real cause of its loss was the fact that the assertions made in the notes were not truthful. Some lenders force borrowers to pay for a Read More, 2022 Top Class Actions LLC. 2. See id. Co., 965 F.2d 1274 (3rd Cir. 's Ex. 05-70950, 2006 WL 3343765 (E.D.Mich. Under Insuring Agreement (D)(1), and Insuring Clause 4 under which Flagstar seeks coverage, there is no element of reliance. Class Action Rebates | Cash You Can Claim! You must contact the Dollar Bank, GTE Financial Credit Union NSF and overdraft lawsuit investigation: Were you charged too much by a bank? ." It covers crowns, bridgework, fillings, root canals and other major dental repairs at 90% with 100% coverage on x-rays, cleanings, etc. Ins. However, this evidence at most proves that Flagstar considered the notes to be important; it does not show that the notes had any real worth. See Jefferson Bank, 965 F.Supp. Flagstar immediately contacted the FBI and sued Amerifunding and others for the fraud. Consequently, Flagstar's loss did not result directly from the forgery, even if the forgery may have caused Flagstar to enter into the transaction. See id. at 1285. made or obtained from the Insured . The court in KW Bankshares concluded that this result was compelled by the "purpose of a banker's blanket bond." ( See id.). This website is not intended for viewing or usage by European Union citizens. Federal asserts that there is no genuine issue of fact that Flagstar's collateral had no value. "The mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff." C). Click to share on Twitter (Opens in new window), Click to share on Facebook (Opens in new window), Click to email a link to a friend (Opens in new window), Click to share on LinkedIn (Opens in new window). G at 59-60. The court stated that, consistent with the allocation of risks in the bond, "the bank's responsibility to investigate the assets of its borrowers was never delegated to the insurance company."
( See Pl. fraud . Id. The debtor then presented the CDs, in the amount of $50,000 and $75,500, respectively, to the plaintiff in order to procure a loan in the amount of $112,500. at 1055. Therefore, even if the signatures were genuine, the real value of the notes, i.e., the promise to pay money, still did not exist. Pursuant to its warehouse lending procedure, once Flagstar obtained the advance request, mortgage documents, and permanent investor information, it would advance the funds to Security National, which, instead of using the funds to close a real estate sale, would disburse the funds to the individual perpetrators of the fraud. The Court finds that this result is consistent with the allocation of risks provided by the financial institution bond. 's Ex.
Flagstar serves as a sponsor of 12 walks in its community banking markets and as presenting sponsor of the Oakland County walk slated for May 1 at Oakland University. ( Id.). Another employee also sought information about the title company and discovered that it had not been in business for at least seven years. Like the standard bond, Insuring Clause 4 in the present Bond protects against: "Loss resulting directly from: Forgery on . 's Ex. The relevant issue here is whether Flagstar has shown, "assuming all other coverage requirements have been met, a direct loss, that is a direct connection between the established facts and its claimed economic harm." 's Ex. "Thereafter, the commercial banks, hold onto or warehouse the mortgage loans until they are reassigned and sold to a permanent lender."
See KW Bankshares, Inc. v. Syndicates of Underwriters at Lloyd's, 965 F.Supp. Since the plaintiff's loss directly resulted from the worthlessness of the collateral and not from the forged signatures, the court concluded that the defendant was entitled to summary judgment. Flagstar does not present factual evidence to rebut Federal's contention that the underlying collateral for the warehouse line of credit was nonexistent. Once a permanent lender purchases the underlying mortgages, the commercial banks' advances are repaid. See id. After a full investigation of the claim, Federal again concluded that Flagstar's loss was not covered because it would have sustained the same loss had the notes contained genuine signatures. ( See id. See KW Bankshares, 965 F.Supp. Top Class Actions is a legal news source Is now a good time to invest in real estate automation technologies? See id. The Court finds that the facts and legal arguments are adequately presented in the parties' papers and the decision process would not be significantly aided by oral argument. . However, because California was a community property state, the wife's signature was necessary to make the guarantee effective. Shortly after her assignment, Eisenhauer began to notice similarities between the handwriting on Amerifunding's requests for advances and the signatures on the deeds and mortgage notes submitted by Amerifunding. Having determined that the collateral in the present case was worthless, the remaining issue is whether this finding requires the conclusion that Flagstar's loss did not result directly from the forgeries on the Amerifunding notes. Consequently, its loss is not covered by the Bond at issue in this case and, therefore, Federal's Motion for Summary Judgment is GRANTED. L at 15-21. Casetext, Inc. and Casetext are not a law firm and do not provide legal advice. any Negotiable Instrument (other than an Evidence of Debt). ( See id.). United States District Court, E.D. As collateral for a loan, the plaintiff received an assignment of a savings account at a credit union. G at 82-83. Example: www.ihaveinsurance.com/. See id. Flagstar claims that the loss it sustained in connection with the Amerifunding scheme is covered under Insuring Clause 4 of the Bond. H). Flagstar Bank is based in Troy, Mich. and serves its customers at branch locations throughout the state. Therefore, in this case, Flagstar has the burden to demonstrate that its loss meets all of the requirements of Insuring Clause 4. 's Ex. In Liberty Nat'l, the plaintiff made two loans to a debtor secured by certificates of deposit ("CDs") purportedly issued by a bank, the National Bank of Commerce, Ltd. ("NBC"), that was chartered in the British West Indies. Id. Your one-stop resource for providing homeowner insurance documents to your Lender. gform.initializeOnLoaded( function() {gformInitSpinner( 805, 'https://topclassactions.com/wp-content/plugins/gravityforms/images/spinner.svg' );jQuery('#gform_ajax_frame_805').on('load',function(){var contents = jQuery(this).contents().find('*').html();var is_postback = contents.indexOf('GF_AJAX_POSTBACK') >= 0;if(!is_postback){return;}var form_content = jQuery(this).contents().find('#gform_wrapper_805');var is_confirmation = jQuery(this).contents().find('#gform_confirmation_wrapper_805').length > 0;var is_redirect = contents.indexOf('gformRedirect(){') >= 0;var is_form = form_content.length > 0 && ! See id. . ( See id. Some banks have worked out deals with insurance providers that benefit the lender and the insurance company at the expense of the borrower. Co. v. Bank of Stockton, 213 F.Supp. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Top Class Actions is a Proud Member of the American Bar Association, Various Trademarks held by their respective owners. ( See id.). In order to resolve the issue the Court must determine whether Flagstar's collateral was, as Federal contends, fictional and, if so, whether this prevents the forgeries from being considered the direct cause of Flagstar's loss as contemplated by the Bond. This practice can create quite a headache for the borrower. 's Ex. Despite several differences, the relevant provisions of the Bond in the present case are substantively the same as the Standard Form 24 bond. Omnisource involved a letter of credit transaction, which is structured differently than mortgage warehousing. ( See id.). . ( See id. There is a lower deductible plan but that one costs more per pay.
E; M at 55-56. The excess bond was subject to the same terms and conditions as the underlying Bond and insured Flagstar for those losses above $10 million. ( See Pl. | I think that the maximum out of pocket on the insurance is $5,000. If you contribute to an HSA the company will match $2 for every $1 you contribute (up to a maximum match of $1,000). 2000). See id. "No recovery is possible under these insuring agreements without an insured showing that it had a legally cognizable interest in assets which were misappropriated, or were measurably lessened in value, as a direct result of facts established by the insured." . The basis for Flagstar's claims against Amerifunding, its title company, and its principals, is the fact that they perpetrated a fraud on Flagstar by creating fictitious mortgage transactions. Peter Haley, Loss and Causation, in ANNOTATED FINANCIAL INSTITUTION BOND 99 (Michael Keeley ed., 2d ed. Legal Notice that reports on class action lawsuits, class action settlements, See 9A COUCH ON INSURANCE 132.47 (1995) (stating the "purpose of the exclusion is to avoid the risk of writing credit insurance."). In addition, Flagstar violated the rules regarding timely pay for flood insurance premiums collected in escrow or to provide adequate notices to borrowers, including if a change in servicer occurred. See id. There the lending institution would actually take control of the facility holding its collateral, ensuring that its investment was protected. Co., 949 F.Supp. Therefore, Plaintiff's argument is without merit. ( See Def. HW Media connects and informs decision makers across the housing economy. See id. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Recent pleadings filed in the bankruptcy case ofFGMC show the lender left its warehouse lenders holding the bag for a mound of debt. ( See id.). This unnecessary construction was inconsistent with principles of contract interpretation, and defeated the purpose of the financial institution bond by essentially requiring the insurer to bear credit risks. . at 1451. . to pay a draft drawn by the seller upon proper presentation of the draft and any documents required by the letter of credit." See id. Federal has since replied. 's Ex. See Def. L.J. Insuring Agreement (D) provided the plaintiff with coverage for "loss through FORGERY OR ALTERATION of, on or in any . 2006-2022 HW Media, LLC. There the plaintiff sought coverage under its blanket bond for losses stemming from a defunct transaction in which it loaned money against a savings account that never contained funds. The Court finds that there is no genuine issue of material fact that Flagstar's loss did not result directly from the forgeries on the promissory notes submitted by Amerifunding. Amerifunding would then apply part of the advances to pay off some of its debt to Flagstar in order to give the appearance that TDF had purchased the loans and real transactions had taken place. (Def. whether procured in good faith or through trick artifice, fraud or false pretenses unless such loss is covered under Insuring Agreement (A), (D) or (E)." See First Federal, 768 F.Supp. ( See id.). is_confirmation;var mt = parseInt(jQuery('html').css('margin-top'), 10) + parseInt(jQuery('body').css('margin-top'), 10) + 100;if(is_form){jQuery('#gform_wrapper_805').html(form_content.html());if(form_content.hasClass('gform_validation_error')){jQuery('#gform_wrapper_805').addClass('gform_validation_error');} else {jQuery('#gform_wrapper_805').removeClass('gform_validation_error');}setTimeout( function() { /* delay the scroll by 50 milliseconds to fix a bug in chrome */ jQuery(document).scrollTop(jQuery('#gform_wrapper_805').offset().top - mt); }, 50 );if(window['gformInitDatepicker']) {gformInitDatepicker();}if(window['gformInitPriceFields']) {gformInitPriceFields();}var current_page = jQuery('#gform_source_page_number_805').val();gformInitSpinner( 805, 'https://topclassactions.com/wp-content/plugins/gravityforms/images/spinner.svg' );jQuery(document).trigger('gform_page_loaded', [805, current_page]);window['gf_submitting_805'] = false;}else if(!is_redirect){var confirmation_content = jQuery(this).contents().find('.GF_AJAX_POSTBACK').html();if(!confirmation_content){confirmation_content = contents;}setTimeout(function(){jQuery('#gform_wrapper_805').replaceWith(confirmation_content);jQuery(document).scrollTop(jQuery('#gf_805').offset().top - mt);jQuery(document).trigger('gform_confirmation_loaded', [805]);window['gf_submitting_805'] = false;wp.a11y.speak(jQuery('#gform_confirmation_message_805').text());}, 50);}else{jQuery('#gform_805').append(contents);if(window['gformRedirect']) {gformRedirect();}}jQuery(document).trigger('gform_post_render', [805, current_page]);} );} );