The founder and CEO of the defunct mortgage lender Live Well Financial wants a federal court to dismiss a lawsuit filed against him by a Michigan-based bank seeking repayment on two loans.

Michael C. Hild claims that he doesn’t owe Flagstar Bank the more than $82 million in principal, interest and expenses it claims he owes for two key reasons — one of the loans was repaid in full and he did not guarantee payment on the second loan.

“Hild affirmatively states that he owes no amounts to Flagstar,” according to Hild’s response, which was filed with the U.S. District Court for the Eastern District of Michigan on Wednesday.

The Troy, Mich.-based Flagstar Bank had filed the federal lawsuit last month claiming that Hild owed the money because he was the guarantor on the two loans. One was a commercial loan, in which the principal and interest owed is $69.17 million; the other was a warehouse loan, in which the principal and interest owed is $13.279 million, according to the May 22 lawsuit.

Hild claims the warehouse loan was paid in full as of June 10, according to his court response.

“Accordingly, neither Live Well nor Hild are obligated to pay any principal, interest, reasonable attorneys’ fees and cost associated with the mortgage warehouse loan agreement or mortgage warehouse note,” Hild’s response said.

Live Well Financial was once a fast-growing mortgage and reverse mortgage lender and servicer that shut down abruptly on May 3 because of what it called “sudden and unexpected developments.” It laid off all the employees working at its corporate headquarters in the Boulders office park in Chesterfield County, including Hild.

Hild founded the company in April 2005 and turned it into a fast-growing mortgage company. It was ranked No. 7 among the top reverse mortgage lenders by volume last year.

In his response, Hild admits that he guaranteed payment on the warehouse loan, but he said he did not do the same for the commercial loan.

“Live Well representatives and its agents told Hild that Flagstar was not requiring a personal guaranty in connection with the opening of the bond-secured credit loan agreement and/or bond-secured credit facility note. Hild relied upon that representation,” according to his filing. “Hild affirmatively states that the guaranty does not, and was never meant to, guarantee the amounts due under the bond-secured credit loan agreement and/or bond secured credit facility note.”

A spokeswoman for Flagstar Bank, a unit of Michigan-based Flagstar Bancorp Inc., could not be reached for comment.


The June 10 date that Hild claims the warehouse loan was paid is the same date that Flagstar Bank and two other creditors of Live Well Financial filed an involuntary Chapter 7 bankruptcy petition with the U.S. Bankruptcy Court in Delaware.

The three Live Well Financial creditors — Flagstar Bank, Mirae Asset Securities Inc. and Industrial and Commercial Bank of China Financial Services LLC — say they are owed a total of more than $130 million.

They claim in federal bankruptcy court that Live Well Financial is under investigation by the bank fraud division of the FBI and by the U.S. Securities and Exchange Commission.

The creditors wanted a judge in the U.S. Bankruptcy Court in Delaware to immediately appoint an interim trustee to oversee Live Well Financial’s liquidation.

But Live Well Financial said in court documents that such immediate action isn’t necessary and that it should be given the proper time to respond. That response is expected in early July.

A bankruptcy judge signed a status quo order last week directing Live Well Financial officials not to destroy documents or take any actions that are outside of the ordinary course of business without court approval.

Meanwhile, the company said it hired management and financial consultants Getzler Henrich & Associates LLC to provide Edward Phillips from its Philadelphia office as an independent restructuring officer, the court documents show.

Live Well said in the bankruptcy court documents filed that it has been working expeditiously on the liquidation of its assets outside of the bankruptcy process. It also said it has been attempting to negotiate productive resolutions with all of its creditors, including the three petitioning creditors.

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