A national wholesale mortgage lender, Taylor, Bean & Whitaker (TBW), based here in Ocala, Fla., has reached a $9 million agreement with the Florida Office of Financial Regulation and 13 other state regulators after an investigation into the company’s “non-traditional” lending practices. Non-traditional loans include payment-option adjustable-rate loans and stated income loans and are among the loans defined as “sub-prime” loans.

According to the Ocala Star Banner, irregularities were found in the companies loan applications which involved applicant asset and income information being altered in order to acquire approval for the loans. (“Liars Loans”) These irregularities are believed to violate underwriting standards, compliance and risk management practices, and internal control procedures with regard to the nontraditional loan products.

The other states involved are Arizona, Georgia, Idaho, Illinois, Louisiana, Maryland, Mississippi, New Jersey, North Carolina, Pennsylvania, Vermont and the District of Columbia.

The company, Taylor, Bean and Whitaker, has been in business about 15 years. According to their website, www.taylorbean.com, they are a top 15 national wholesale mortgage lender with 9 operation centers nationwide. They also claim to offer “a creative web based loan origination that streamlines the mortgage process…”

www.mortgageorb.com reported as part of the agreement:

• An independent firm will be hired to review TBW’s non-traditional mortgage loans originated from 2006 to 2007, to decide whether additional reimbursement to consumers is needed. TBW will also make “reasonable efforts” to secure any required third-party consents in order to modify mortgage loans they currently service.
• 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 $9 million will assist the states in overseeing mortgage origination practices and to development and occupy costs of the Nationwide Mortgage Licensing System, est.,2003.

What this means to consumers who have existing “non-traditional” loans in TBW’s portfolio and who qualify for the Making Home Affordable program, may be able to get their loans modified, enabling them to keep their homes. Homeowners can go to www.makinghomeaffordable.gov for more information. Also consumers can examine to see an increase in the quality of new mortgage originators.

At this website. homeowners will be asked a series of 5 preliminary questions and then directed to the next page where they will find a checklist of information they will be required to provide to their mortgage servicer. From there they will required to call their mortgage servicer to ask if they can be considered for a “Home Affordable Modification.”

Terms:

www.thetruthaboutmortgage.com defines a Wholesale Mortgage Lender as one who originates and services loans and then sells them on the secondary market.(Usually within a month or two) They work through independent mortgage brokers to acquire loans, which they in turn send the loan to a wholesale lender who underwrites, processes and funds the loan.

Wholesale lenders specialize in different type of loans. The following are examples of different wholesale lenders categories:

• Sub-prime
• Reverse mortgage
• Alt-A
• Manufactured homes
• Commercial
• Investment properties
• Multi unit
• Raw land, etc.

www.mtgprofessor.com defines Stated income loans, otherwise known as “liars loans” qualifies the borrower for the loan according to the income the borrower states on the application.

Payment-option adjustable-rate loans are loans which offer a choice of one of four payment methods These loans offer what’s typically called a “teaser rate”, which, has gotten a lot of borrowers in trouble. These loans adjust frequently, sometimes monthly based on the London Interbank Offered Rate (LIBOR) plus a margin position by the lender. As the LIBOR rises so does the borrower’s mortgage payment.