|By PR Newswire||
|January 17, 2013 04:30 PM EST||
SACRAMENTO, Calif., Jan. 17, 2013 /PRNewswire/ -- Hackard Law attorneys regularly represent borrowers and guarantors in negotiation with and litigation against lenders. By the time our law firm is engaged, it's not unusual that "the wolf is at our client's front door", and there's limited time for deliberation. Yet a recent case illustrates that an entire wolf pack might also be at the lender's door.
EDF Resource Capital, Inc. ("EDF") v. United States Small Business Administration ("SBA") et al. brings the need for lender knowledge to life. EDF was an SBA-authorized Certified Development Company (CDC). As such it was allowed to arrange, close, service and when necessary collect on SBA 504 Loans. EDF, on behalf of the SBA, received processing and closing fees for both originating as well as servicing 504 Loans. Since 2006, EDF has received over $49 million in fees from its participation in the 504 Loan Program. It had the "second largest SBA 504 Loan portfolio of the CDCs currently participating in the 504 Loan Program." But there were, according to the SBA, "significant problems in EDF's systems or controls, deceptive action, substantial law violation, serious compliance problems, and serious reporting failures." Such problems resulted in EDF's closure. An intensive review of SBA's Agency Decision regarding EDF Resource Capital, Inc. is a must-read for EDF borrowers and guarantors seeking to know their lenderi.
EDF as a lender in its final months or years of operation was in a precarious position. The SBA record reveals it was insolvent and was not paying the millions that it owed on its SBA reimbursement obligations. EDF was maintaining two sets of accounting books and records: one disclosed to the SBA and one notii. Such conduct hid from the "SBA the status of hundreds of defaulted loans, thus knowingly painting a materially incomplete, misleading and falsely positive picture of its Loan Loss Reserve Fund and of the Fund's ability to protect SBA from the risk of loss."
The SBA's Final Agency Decision indicates that EDF refused to pay its payment and loss share obligations. The decision recites that "the nature, extent and severity of EDF's breaches and violations, including the dollar magnitude of the risk, EDF's insolvency, the unwillingness of EDF's management and board to correct identified problems, and program integrity considerations, all warrant the permanent revocation of EDF's 504 program authority and require the permanent transfer of EDF's SBA 504 Loan portfolio."
Borrowers and guarantors attempting to negotiate loan settlements with EDF experienced the same type of deceptive actions as those referenced by the SBA. The Final Agency Decision, coupled with a Federal Judge's Memorandum Opinion, go a long way for EDF borrowers and guarantors to know their lender.
SOURCE Hackard Law
- "All It Took Was One E-Mail to Larry," Says Former eBay Research Director As He Moves to Google
- Google Ramps Up Its Mobile Reach: Launches "Mobile Web Search"
- Ericsson + Napster = World's First "Wireless Digital Music" Brand
- VoIP Update: Yahoo! Buys DialPad
- Free Guest Passes for the SOA World Conference & Expo in NYC
- SYS-CON i-Technology Podcast August 30, 2005
- A Flair for Food - Health-Conscious Cooking Is This Chef's Cup Of Tea
- Sony PSP May Feature Porn
- Kapow Helps Seiko UK, Provides SMS Text-Alert Services
- South Korea is World's Largest Phisher