Maryland Commissioner of Financial Regulation Announces Multi-State Agreement with Taylor, Bean & Whitaker Mortgage Corporation

Model Agreement Will Bring Relief to Homeowners

BALTIMORE – (June 22, 2009) - The Office of the Commissioner of Financial Regulation today announced a major, multi-state agreement with Taylor, Bean & Whitaker Mortgage Corporation (TBW) that will result in payment of $9 million to assist participating states in their oversight of mortgage origination practices and the adoption of the federal loan modification program to assist struggling homeowners.

The agreement between TBW and 14 state mortgage regulators follows a coordinated multi-state examination of TBW to determine compliance with laws and regulations pertaining to the origination of nontraditional mortgage loans in 2006. These products, also referred to as “alternative” or “exotic” mortgage loans, include “interest-only” mortgages, “payment option” adjustable-rate mortgages and stated income loans. The examination alleged exceptions relating to TBW’s underwriting standards, compliance and risk management practices, and internal control procedures with regard to these loans. Alleged practices included the multiple submissions of loan applications by third-party originators through automated underwriting programs resulting in altered income and asset information for prospective borrowers in order to qualify applicants for mortgage loans. Concern over these practices led TBW to stop offering nontraditional mortgages in early 2007 and to make other changes to its internal control processes.

“This agreement will bring added relief to homeowners whose loans were originated by TBW and improve the quality of new mortgage originations through better processes and controls going forward,” said Sarah Bloom Raskin, Maryland’s Commissioner of Financial Regulation. “We are living with the damage caused by consumers receiving mortgages that they can’t afford. This is another strong step in addressing the problem and preventing it from happening again.”

The major provisions of the agreement between TBW and the 14 state regulators include:

• The implementation of a loan modification program for loans held in TBW’s investment portfolio that will conform with the U.S. Department of the Treasury’s “Making Home Affordable” program. TBW will also make reasonable efforts to secure any required third party consents in order to modify mortgage loans currently serviced.
   
• The hiring of an independent firm, to be approved by the state mortgage regulators, to review TBW’s nontraditional mortgage loans originated from 2006 to 2007 to determine whether additional reimbursement to consumers is warranted.
   
• The implementation of a comprehensive compliance program, to be reviewed and approved by the state mortgage regulators, to ensure compliance with applicable laws, regulations and rules governing the conduct and operation of its mortgage business in each of the states.
   
• the payment of $9 million by TBW to assist the states in their oversight of mortgage origination practices. Half of the payment will be apportioned equally to the 14 participating jurisdictions. The remaining monies will be dedicated to the ongoing development and maintenance costs of the Nationwide Mortgage Licensing System (NMLS). The NMLS was developed by state banking and mortgage regulators starting in 2003 to create an online, centralized database of mortgage companies and mortgage loan originators. The goals of the NMLS which launched on January 2, 2008, are to create greater transparency and protection for consumers, detect and reduce mortgage fraud, and streamline licensing requirements both for regulators and the mortgage industry.

Maryland also conducted a state-specific compliance examination. That examination has resulted in over $50,000 in refunds to Maryland borrowers to date.

Consumers do not need to take any action to pursue a loan modification. As part of the agreement, TBW will reach out to impacted consumers who qualify for the Making Home Affordable program. Consumers can check their eligibility for a modification at the Web site established by the Treasury Department.

Based in Ocala, Florida, TBW is one of the 10 largest wholesale mortgage lenders in the country. According to Home Mortgage Disclosure Act data, TBW originated 215,880 mortgage loans nationally between 2006 and 2007.

The 14 State mortgage regulators included in this settlement are the Arizona Department of Financial Institutions; the District of Columbia Department of Insurance, Securities and Banking; the Florida Office of Financial Regulation; the Georgia Department of Banking and Finance; the Idaho Department of Finance; the Illinois Department of Financial Professional Regulation-Division of Banking; the Louisiana Office of Financial Institutions; the Maryland Office of Financial Regulation; the Massachusetts Division of Banks, the Mississippi Department of Banking and Consumer Finance; the New Jersey Department of Banking and Insurance; the North Carolina Office of the Commissioner of Banks; the Pennsylvania Department of Banking; and the Vermont Department of Banking, Insurance, Securities and Health Care Administration.

TBW contact:
Melissa Spata
315 NE 14th Street
Ocala, FL 34470
Office: (352) 671-0178
Fax: (352) 690-0878

Updated July 30, 2009