Opinion ID: 524998
Heading Depth: 2
Heading Rank: 2

Heading: Late and Incorrect Participation Payments

Text: 10 On several occasions in 1983 and 1984, Talman failed to remit participation payments to Liberty on time. All of the late payments were on the Clifton note. Most of the late payments were due to accounting errors, lost checks, and the like. Talman claimed, for example, that the June 1983 payment from Clifton was misapplied, and that the July, 1983 check from Clifton was lost in the mail. Liberty did not receive its participation payments for these months until August 24, 1983. Similarly, the November and December, 1983 participation payments were not tendered to Liberty until January 11, 1984. Talman admitted that it had erred in failing to apply the November payment to Liberty's account, and that it had been delayed in processing the December payment. 11 In January, 1984, however, it was a default by the Clifton mortgage loan debtor that caused a delay in Liberty's receipt of its participation payment from Talman. 2 On February 1, 1984, Talman wrote the Department of Housing and Urban Development, declaring that the Clifton note was in default. On February 14, 1984, the Clifton debtor tendered the overdue January payment to Talman. In March, 1984, Liberty agreed to accept the November, December, and January participation payments due for the Clifton note under a Reservation of Rights agreement. 12 In sum, in the summer and fall of 1984, Talman was late four times in tendering to Liberty its participation payments on the Clifton note. Various reasons were given for these delays, but the mortgage loan debtor was not in default. In January, 1984, the Clifton mortgage debtor was in default. But the January participation payment, along with all the other late payments, was ultimately received by Liberty. Since that time, all subsequent participation payments for the Clifton note have been remitted to Liberty in a timely manner.
13 The Participation Agreement guarantees a 6 percent net interest return to Liberty on all participated loans for the first 10 years of the Agreement, regardless of the interest actually charged or collected by Talman. This rate was to increase to 7 percent in April, 1986. Talman did not pay the stepped-up interest rate for almost a year after it was due, despite requests from Liberty. In March, 1987, however, Talman paid Liberty $33,198.56, representing the 1 percentage interest shortfall for the period in question. Liberty accepted the payment under its Reservation of Rights agreement. Talman continues to pay 7 percent interest to Liberty.