Opinion ID: 3009588
Heading Depth: 2
Heading Rank: 3

Heading: Crestmont's Loan Policies

Text: Crestmont had a loan policy which Bailey had authored. It was based on OTS regulations and stated: The policy of the bank is to carefully administer extensions of credit which are subject to special reporting requirements. These loans include the following: . . . - [L]oans to individuals or entities that conduct business or have conducted business with officers or directors of the bank. These situations are clearly described in the bank's loan committee credit summary. They are presented to the bank's Senior Loan Committee regardless of their size. Id. at 314. Crestmont had another policy, also based on OTS regulations, which forbade it from either directly or indirectly mak[ing] any loan to or purchase . . . any loan made to (..continued) understood by all involved that that was a condition to closing. Id. at 191. 7 . Crestmont negotiated that instrument but the date of negotiation is unclear. OTS contends that the check was negotiated before June 1, 1991, the date Seidman transferred his interest, but Bailey contends the check was cashed after Seidman relinquished his partnership. Levine's delivery of the check for $2,000 resulted in a binding contract two days before Seidman's formal withdrawal. See generally Restatement (Second) of Contracts § 17 (1981). any third party on the security of real property purchased from any affiliated person of the association unless the property was a single-family dwelling owned and occupied by the affiliated person as a permanent residence. OTS Appendix (OTS App.) at 96-97 (citing 12 C.F.R. § 563.43(c)(1)). Crestmont's policies also put on its directors a fundamental duty to avoid placing themselves in any position which creates, leads to or could lead to a conflict of interest or even the appearance of such conflict of interest between the accomplishment of the purposes of the association and the personal financial interests of the directors, officers and other affiliated persons. Id. at 98-99 (citing 12 C.F.R. § 571.7). Specifically, Crestmont's directors were supposed to avoid any transaction in which a third party purchaser seeks to obtain a loan from the association secured by real estate acquired from the affiliated partnership or as to which the affiliated partnership holds a security interest. Id. at 100. Bailey and Seidman were fully aware of these policies.