National City Bank v. Hill

Ok, here’s the deal.  Banks made tons of loans while ‘looking the other way’ and not verifying income with a little bit of security in knowing that if the loan goes bad, the loan can’t be discharged in bankruptcy because the bank can claim the borrower committed fraud.  And now we find this recent ruling in re Hill that has the banksters shaking in their boots:

“While the Court finds and concludes that the debtors made a material false representation concerning their financial condition to the Bank in October 2006, with knowledge of its falsity and the intent to deceive the Bank, the Court finds and concludes that the Bank’s nondischargeability claim under § 523(a)(2)(B) must fail.  The Bank failed to prove that it reasonably relied on the Debtors’ false representation concerning their income, as set forth in the October Loan Application.  As a result, the Bank’s claim has been discharged.  Judgment will be ordered accordingly.”

In re Hill (National City Bank v. Hill), United States Bankruptcy Court, Northern District of California, Case No. A.P. 07-4106 (Filed May 23, 2008)