FDIC as Receiver for City Bank vs. Conrad D. Hanson and ...
FDIC as Receiver for City Bank vs. Conrad D. Hanson and ...
FDIC as Receiver for City Bank vs. Conrad D. Hanson and ...
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C<strong>as</strong>e 2:13-cv-00671 Document 1 Filed 04/15/13 Page 40 of 97<br />
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a. Failed to require Borrower E to contribute hard equity to the project. The<br />
Loan Memo <strong>for</strong> the Borrower E Loan listed the average lot price <strong>as</strong><br />
$105,000 <strong>and</strong> the average hard costs per SFR <strong>as</strong> $137,908. For all 28<br />
SFRs, this totaled $6,801,424, which w<strong>as</strong> less than the amount of the<br />
Borrower E Loan. Borrower E did not need to contribute any equity to the<br />
lots or hard costs of this construction project.<br />
b. Failed to per<strong>for</strong>m or insist upon an analysis of the guarantors' abilities to<br />
service all of their respective debt, including the Borrower E Loan.<br />
Borrower E w<strong>as</strong> a single-purpose entity with no financial history, so<br />
Defendants had to rely entirely on the financial strength of the guarantors.<br />
Although the Loan Memo included financial in<strong>for</strong>mation <strong>for</strong> the<br />
guarantors of the Borrower E Loan ("Guarantors E-1, E-2, <strong>and</strong> E-3"), the<br />
Loan Memo did not contain any analysis of the ability of Guarantor E-1,<br />
E-2, or E-3 to service the debt that each owed. According to the Loan<br />
Memo, their combined liabilities, including the Borrower E loan, totaled<br />
$33,529,052. B<strong>as</strong>ed on the guarantors' combined c<strong>as</strong>h <strong>and</strong> c<strong>as</strong>h<br />
equivalents of $1,069,114, the guarantors' c<strong>as</strong>h amounted to only<br />
approximately 3.2 percent of their total related debt <strong>and</strong> <strong>City</strong> <strong>Bank</strong> loan<br />
commitments.<br />
c. Failed to consider or knew of <strong>and</strong> disregarded the LTV ratio limit<br />
violation of the Borrower E Loan. The supervisory LTV ratio limit <strong>for</strong> a<br />
residential construction loan w<strong>as</strong> 85 percent. The Loan Memo stated that<br />
the discounted value of the collateral w<strong>as</strong> $8,310,000, which results in an<br />
LTV ratio of 90.5 percent. The LTV ratio w<strong>as</strong> even higher when<br />
calculated using the value contained in the appraisal, which did not match<br />
the value in the Loan Memo. The appraisal did not use the terms<br />
aggregate retail value or discounted value, <strong>and</strong> instead provided that the<br />
COMPLAINT - Page 40<br />
ATER WYNNE LLP<br />
1652284/1/SKB/105030-0018 601 UNION STREET, SUITE 1501<br />
SEATTLE, WA 98101-3981<br />
(206) 623-4711
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