Shockingly, there continues to be major fraud in the mortgage industry:
Bloomberg: The FHA, the government mortgage insurer, yesterday suspended Taylor Bean, its third-largest lender, citing possible fraud. It’s “distinctly possible this is going to be the end of Taylor Bean,” said David Lykken, managing partner at consultant Mortgage Banking Solutions in Austin, Texas.
FHA mortgages represent about half of all new loans for home purchases, up from about 10 per cent at the start of 2008, as borrowers with low down payments or poor credit get turned down for other financing, according to a Bank of America Corp. report last month. Taylor Bean, based in Ocala, Florida, does business across the U.S. through loan brokers and other lenders. It ranked 12th among U.S. mortgage originators in the first half of this year with $17 billion of loans, or 1.7 per cent of the total, according to industry newsletter Inside Mortgage Finance
Taylor Bean is major player in the desperate Florida market:
Taylor Bean didn’t submit a required annual financial report and “misrepresented that there were no unresolved issues with its independent auditor,” the FHA said in a statement. The auditor discovered “irregular transactions that raised concerns of fraud,” the FHA said. The agency’s decision follows a failed attempt by Taylor Bean to lead an investor group that would pay $300 million for a controlling stake in Colonial BancGroup Inc., one of its own lenders.
We’re really not surprised that the industry is still beset by all kinds of problems. Heck, we see ads on TV for refinancing that proudly proclaim how little documentation is needed to refinancing. And of course, the whole loan modification scheme is really just subprime, high loan-to-value lending all over again. Unless there’s something horrendously egregious going on, the whole plan is to do more of the same.
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