Fawzi and Dolores Tay Tay Assaad - Page 4

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          reference.  At the time of filing the petition, petitioners                 
          resided in Novato, California.                                              
               Mr. Assaad was a real estate developer and investor.3  On or           
          about December 8, 1988, petitioners purchased approximately 2.2             
          acres of land in Atherton, California, which consisted of three             
          parcels:  3, 9, and 15 Isabella.  Mr. Assaad intended to develop            
          the three parcels by constructing three residential homes for               
          sale.  Pacific Bank (Pacific) lent $1.46 million to Mr. Assaad              
          (the land loan) for the purchase of the land.  The land loan was            
          secured by a deed of trust covering the three parcels of land.              
               On July 29, 1989, Pacific lent Mr. Assaad $2.64 million                
          under a construction loan agreement (the Pacific construction               
          loan) for two of the units in the Atherton project, 3 and 15                
          Isabella.  A deed of trust in favor of Pacific was recorded with            
          respect to the two parcels.4  Mr. Assaad signed a promissory note           
          and executed a guaranty of completion and performance in favor of           
          Pacific for the construction loan.  The note provided for an                
          initial interest rate of 12.5 percent and a variable interest               
          rate on the basis of “an index which is THE PACIFIC BANK GUIDANCE           
          RATE”.  A 12-month interest reserve of $228,000 was included in             




               3Mr. Assaad was also the sole shareholder of Golden Sunset             
          Homes, Inc., which owned a residential care home, Hopkins Manor.            
               4The loan was also collateralized with a deed of trust of              
          $1.5 million with respect to Hopkins Manor.                                 




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