Project Description

Loan Refinancing Expert for Contract Dispute

The need

Attorneys representing the defendants, a majority stakeholder of a Limited Liability Company (LLC), against a derivative complaint suit brought by a minority member of the LLC needed an expert on loan refinancing to bolster their case. The complaint alleged that the majority stakeholder, and owner of the lender of property loans made to the LLC, was violating its fiduciary duty by actively keeping the LLC from refinancing those loans to a lower interest rate even though there were lower rates available. Furthermore, the complaint alleged that the loans were disadvantageous to the LLC as they were interest-only, meaning loan payments were not paying down the loan principal. As the defendant’s case largely turned on whether loans could be refinanced with HUD under 232/223(f), the ideal expert would be able to opine on whether it was possible for the LLC to obtain that type of refinancing.

Our approach

As the expert would need to be credible in refinancing with HUD, the client needed someone either formerly with HUD or who was a HUD certified underwriter. Testifying experience was also preferred, but not required for the right expert qualifications.

The expert

We found an expert in the fields of mortgage and finance fraud. For over 30 years, he had worked in both the federal and private sectors regarding financial regulatory issues. Additionally, he had either been deposed of testified in hundreds of cases using his expertise in mortgage fraud, banking, and finance. In the many criminal cases where he had acted as an expert for the prosecution, the prosecution had won every case. Furthermore, he had served as the Supervisor of Lending Investigations for HUD for several years. Finally, he held a BA in Business as well as an MBA and was a Certified Fraud Examiner through the Association of Certified Fraud Examiners. The defense was successful, obtaining a dismissal of all claims that the majority stakeholder breached fiduciary duty of care and loyalty in managing the limited liability company.