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$15,000. In November 1989, he sold the property to Vinson L.
Baker and Danella M. Baker (the Bakers) for $61,000. The Bakers
obtained a mortgage loan through First Security Federal Savings
and Loan Bank (hereinafter First Security) and paid petitioners
$39,100 in cash at settlement. The Bakers also provided
petitioner with a deferred purchase money second deed of trust
(hereinafter second deed) in the amount of $21,900. The second
deed was payable in one year at 12-percent interest.
A dispute arose between the Bakers and First Security, and
the Bakers were unable to meet the interest obligations on their
mortgage. The Bakers brought a legal action against First
Security, alleging that First Security had "set them up" to fail
in order to obtain possession of the property. The dates with
respect to the dispute and the legal action against First
Security are not clear from the record. Petitioners agreed with
the Bakers' allegations and paid legal fees and costs in order to
protect petitioners' interests.
In 1989, Vinson Baker filed for Chapter 7 bankruptcy, and
petitioner filed a claim as a creditor for $21,900 from the
second deed and for $3,285 in accrued interest. In 1992, Danella
Baker filed for Chapter 7 bankruptcy, and petitioner claimed a
debt in the amount of $28,000, which represented $21,900 from the
second deed and $6,100 in accrued interest. The U.S. Bankruptcy
Court for the District of Columbia discharged Vinson Baker's
debts in December 1991, and the U.S. Bankruptcy Court for the
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