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Anchor Savings and Loan Association (Anchor), gave a mortgage on
the lots, and a second mortgage on his home, as security (entire
transaction hereinafter referred to as the “loan”). According to
the loan commitment letter, $20,000 of the amount borrowed was to
be placed into a passbook savings account at Anchor as an
interest reserve.
In 1990, petitioner completed a home on one of the lots, and
in 1991, he sold a partially completed home on another one of the
lots. Before 1999, petitioner sold all of the lots that had
secured repayment of the loan.
During 1994 and 1995, Anchor was placed in receivership by
the Resolution Trust Corporation, and petitioner’s loan was
subsequently sold to Federal Financial Co. On March 15, 1999,
petitioner and Federal Financial Co. executed a modification
agreement whereby petitioner agreed to repay the outstanding
indebtedness of the loan, $100,353.38, at a 9-percent interest
rate over 84 months. Pursuant to the terms of the modification
agreement, petitioner was required to make $1,000 monthly
payments, each payment consisting of principal and interest.
Pursuant to the modification agreement, petitioner made 12
monthly payments of $1,000 toward the loan to Federal Financial
Co. in 2001. Of the $12,000 paid, $8,515.64 was applied to
interest and $3,484.16 was applied to the principal of the loan.
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Last modified: November 10, 2007