United States v. NBD Bank, N.A.

Decision of the U.S. District Court for the Eastern District of Michigan

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Government sued to recover funds from bank that a GNMA-approved mortgage issuer improperly diverted from the GNMA mortgage program and paid to NBD as repayment of a loan to the issuer. The government argued that NBD must return the funds on theories of constructive trust, conversion, and breach of contract. The District Court granted summary judgment in favor of the government, represented by Mitchell J. Matorin. The government successfully argued that the funds held by the loan issuer in the NBD bank account were held in constructive trust for the government, and that it could trace those funds through the issuer's bank accounts and into NBD's hands. Because NBD knew the source of the funds, it took the funds subject to the constructive trust and was liable for them.

This case established a strong precedent in favor of GNMA's ability to recover funds from bank accounts held by GNMA loan issuers and was the first case providing that protection to GNMA.

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Reference Info:Decision | Federal, 6th Circuit, Michigan | United States


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Mitchell J. Matorin, Matorin Law Office, LLC | Attorney Advertising

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