Legal Question in Real Estate Law in Massachusetts
Difference between a Compromise and a Sale
The FDIC took over a failed bank owning that failed bank's assets. One of the assets was an asset that my dad co-signed on with a Non profit. The Non-profit defaulted on the loan. My mother contacted the FDIC working a compromise w/ them. She said that she was the wife & that her husband disappeared & that the property was contaminated. The FDIC compromised the Note w/ her(she was never a signer on the Note)& agreed to compromise the Note by wiping out all of the interest & a portion of the principle. The original was $47k prinicple, $18k in interest = $65k. FDIC agreed to accept $37k as final & full settlement. My mother didn't have $37k & couldn't get financing. She contacted a friend of hers. Her friend agreed that he would put up the money for her. The FDIC could not deal w/ him because he wasn't a related party. The FDIC only dealt w/ related parties. The friend had a friend who was a banker & got the FDIC to reduce the Note further to $18k. The friend paid the FDIC on behalf of my mother. The FDIC assigned the Note to my mother, she assigned the Note to the friend. Can the friend collect on the full amount of what was originally owed to the FDIC or not. Can he collect the $65k or is he entitled to only collect $18k
1 Answer from Attorneys
Re: Difference between a Compromise and a Sale
Proper examination should be made of the entire trail of documents, including the original note and security documents (if any), all instruments of assignment, all instruments compromising the amount(s) due under the loan, and any final release of liability documents. You might benefit from a consultation from your attorney on what value the compromised obligation now has and how to collect pn this obligation, if this is now even possible. Good Luck!
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