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notes that Cooper executed to Trustmark (the Trustmark notes).
The loan agreement further provided for the assignment to AFIC
and AFLIC of life insurance policies issued by Lamar Life
Insurance Co. (the Lamar policies) on Cooper’s life. In January
1986, Mrs. Cooper, the owner of the Lamar policies, so assigned
the Lamar policies.
Matheney Ford defaulted on the loan, leaving Cooper indebted
to AFLIC in the amount of $140,000 (hereinafter sometimes
referred to as the Cooper debt). On May 24, 1988, the Coopers
and AFLIC executed a second loan agreement (the second loan
agreement). Under the second loan agreement, AFLIC agreed to
purchase the outstanding Trustmark notes and the Trustmark deed
of trust for $210,000 and to renew Cooper’s $140,000 indebtedness
in exchange for new promissory notes from the Coopers. In
accordance with the second loan agreement, the Coopers executed
the following, with AFLIC as payee: (1) A promissory note in the
amount of $328,500 and (2) a nonrecourse promissory note in the
amount of $21,500. The second loan agreement provided that the
Lamar policies remained assigned to AFLIC.
AFLIC foreclosed on the deed of trust, purchased the Cooper
residence, and subsequently sold it, applying the proceeds to
reduce the Coopers’ debt. On or about June 22, 1989, Cooper and
AFLIC entered into a third loan agreement (the third loan
agreement), whereby they agreed to refinance the Coopers’
indebtedness by having Cooper execute a new promissory note to
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