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 44 of 97<br />
of the project; they failed to consider the borrower's <strong>and</strong> guarantors' inability to repay their<br />
debts; they disregarded the LTV ratio limit violation; <strong>and</strong> they failed to en<strong>for</strong>ce the Loan<br />
Policy's limit on the borrower's debt-to-worth ratio. Had <strong>Hanson</strong> <strong>and</strong> Sheehan followed<br />
prudent, safe, <strong>and</strong> sound lending practices <strong>and</strong> the Loan Policy, the <strong>Bank</strong> would not have made<br />
the Borrower F Loan, <strong>and</strong> the resulting damages would not have occurred.<br />
Borrower G (I)<br />
128. On or about September 28, 2007, Sheehan approved a construction loan <strong>for</strong><br />
$2,608,000 to Borrower G (the "Borrower G (I) Loan"). On or about the same day, Defendants<br />
caused or allowed the <strong>Bank</strong> to disburse approximately $688,688 of the Borrower G (I) Loan. On<br />
or about October 4, 2007, <strong>Hanson</strong> approved the Borrower G (I) Loan.<br />
129. Between September 2007 <strong>and</strong> October 2009, the <strong>Bank</strong> disbursed all of the<br />
Borrower G (I) Loan.<br />
130. The Loan Memo <strong>for</strong> the Borrower G (I) Loan stated that the purpose of the loan<br />
w<strong>as</strong> to fund the construction of two triplex buildings that consisted of six single-family units in<br />
Seattle, W<strong>as</strong>hington. Borrower G w<strong>as</strong> also planning to use the Borrower G (I) Loan to purch<strong>as</strong>e<br />
the l<strong>and</strong> <strong>for</strong> the two triplexes.<br />
131. The Loan Memo provided that the primary source of repayment w<strong>as</strong> to be the sale<br />
of the six single-family units <strong>and</strong> that the secondary source of repayment w<strong>as</strong> to be the <strong>as</strong>sets <strong>and</strong><br />
income of the guarantors of the Borrower G (I) Loan ("Guarantors G-1, G-2, <strong>and</strong> G-3").<br />
132. The Loan Memo provided that the security <strong>for</strong> the Borrower G (I) Loan w<strong>as</strong> to be<br />
the project's six single-family units.<br />
133. <strong>Hanson</strong> <strong>and</strong> Sheehan engaged in imprudent, unsafe, <strong>and</strong> unsound lending<br />
practices <strong>and</strong>/or violated the Loan Policy when they approved the Borrower G (I) Loan because<br />
they, among other things:<br />
a. Failed to require Borrower G to contribute any hard equity to the project.<br />
The Loan Memo <strong>and</strong> the Loan Officer Analyses <strong>for</strong> the Borrower G (I)<br />
Loan showed that the estimated total cost of the project, inclusive of<br />
COMPLAINT - Page 44<br />
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