CitiMortgage is suing two Chicago bankers, Steve and John Calk, alleging a mortgage bank that the brothers once operated had provided inaccurate residential loan underwriting documents.
CitiMortgage, which is based in O’Fallon, Mo., is seeking more than $4.5 million in damages in the breach of contract lawsuit filed in U.S. District Court in St. Louis Monday.
Since 2004, CitiMortgage purchased 4,790 loans from Chicago Bancorp, once one of the largest privately held retail mortgage banks in the country before it dissolved in 2012, according to court documents.
Steve Calk was president and co-owner of Chicago Bancorp, and John Calk was vice president and co-owner before Chicago Bancorp dissolved. Steve Calk now is founder, chairman and CEO of the Federal Savings Bank in Chicago, which also is named a defendant in the lawsuit, and John Calk is vice chairman.
Eighteen loans Chicago Bancorp sold CitiMortgage over the last decade contained inaccurate information or material misrepresentations that included misrepresenting a borrower’s income, employment or debt, according to the lawsuit.
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In one loan Chicago Bancorp sold CitiMortgage, the lawsuit alleges a borrower provided a Social Security number that belonged to another individual.
“Chicago Bancorp sold (CitiMortgage) at least 18 loans ... that were underwritten and/or originated based upon materially inaccurate information or on material misrepresentations,” CitiMortage’s lawsuit alleges.
CitiMortgage claims its contract with Chicago Bancorp required Chicago Bancorp to repurchase loans that CitiMortgage deemed did not meet the requirements set out in the contract.
After Chicago Bancorp dissolved, CitiMortgage alleges that the Federal Savings Bank continued Chicago Bancorp’s business of originating mortgage loans with Chicago Bancorp’s employees, and Chicago Bancorp’s assets were transferred to the Federal Savings Bank and its holding company, National Bancorp Holdings.
“Chicago Bancorp and the other defendants made the transfer of Chicago Bancorp’s assets with the actual intent to hinder, delay and prevent (CitiMortgage) from collecting amounts due to it in payment of repurchase claims against Chicago Bancorp,” CitiMortgage alleges in the lawsuit.
A CitiMortgage spokesman and an attorney representing the Calks, the Federal Savings Bank and National Bancorp both declined to comment on the lawsuit.
The new lawsuit isn’t the first time the parties have litigated over home loans. CitiMortgage sued Chicago Bancorp, the Calks, the Federal Savings Bank, and National Bancorp Holdings in February 2012 in federal court in St. Louis alleging 11 loans contained inaccuracies, and CitiMortgage sought more than $2 million in damages in that case. In a summary judgment this year, Judge Catherine Perry approved CitiMortgage’s motion for summary judgment in its favor on nine of the 11 loans in dispute.