TBW Mortgage ordered to modify mortgages, pay $9 million in fines
The Vermont Banking, Insurance, Securities and Health Care Administration has announced a major agreement with Taylor, Bean & Whitaker Mortgage Corporation (TBW) regarding its mortgage lending practices for so-called “nontraditional” loans made in 2006. This agreement will result in a detailed review of TBW’s nontraditional loan exceptions, the adoption of the federal loan modification program to assist struggling homeowners, and the payment of $9 million to assist the states in their oversight of mortgage origination practices.
The agreement between TBW and 14 State mortgage regulators follows a coordinated multi-state examination of TBW to specifically determine compliance with laws and regulations pertaining to the origination of nontraditional mortgage loans in 2006. Concern over these practices led TBW to stop offering nontraditional mortgages in early 2007 and to make other changes to its internal control processes.
The agreement comes as the result of a multi-state examination, led by the Pennsylvania Department of Banking, of nontraditional mortgage loans originated by TBW in 2006. The review uncovered numerous instances in which applicants' incomes and assets were altered in order to gain loan approvals. Concern over these practices prompted TBW to stop offering nontraditional mortgages in early 2007 and to make changes to its internal control processes.
Based in Ocala, Florida, TBW is currently one of the 10 largest wholesale mortgage lenders in the United States. According to Home Mortgage Disclosure Act data, TBW originated 215,880 traditional and nontraditional mortgage loans nationally between 2006 and 2007.
The major provisions of the agreement include:
- The implementation of a loan modification program for loans held in TBW's investment portfolio that will conform to the "Making Home Affordable" program announced by the United States Department of the Treasury. 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 the mortgage industry. Half will be dedicated to ongoing development and maintenance of the Nationwide Mortgage Licensing System (NMLS), an online database of mortgage companies and mortgage loan originators used by state regulators. The remaining half will be divided equally among the states participating in the agreement.
Affected consumers do not need to take any action at this point to pursue a loan modification. As part of the agreement, TBW will reach out to impacted consumers who qualify for the federal Making Home Affordable program. Under the Making Home Affordable program, the following mortgages are eligible for a loan modification:
- The mortgage is for the homeowner's primary residence;
- The amount owed on the first mortgage is equal to, or less than, $729,750;
- The mortgage was closed before January 1, 2009;
- The homeowner's payment on the first mortgage (including principal, interest, taxes, insurance and homeowner's association dues, if applicable) is more than 31 percent of current gross income; and
- The homeowner is having trouble paying their mortgage. For example, a significant increase in mortgage payment OR reduction in income since obtaining the loan OR a hardship that has increased expenses (like medical bills).
Consumers can check their eligibility for a loan modification at www.makinghomeaffordable.gov.
Other state mortgage regulators participating in the TBW settlement include Arizona, Florida, Georgia, Idaho, Illinois,Louisiana, Maryland, Massachusetts, Mississippi, New Jersey, North Carolina, Vermont and Washington, D.C.
HARRISBURG, Pa., June 22 /PRNewswire-USNewswire/ & Vermont BISHCA-