Flagstar Bank, Hometown Lenders’ former warehouse lender, is suing the store and its owner, Billy Taylor, alleging “wrongful conduct” over defaults on the warehouse line. This adds yet another lawsuit to the already-enough list. pending litigation For lenders.
Flagstar is seeking to recover $21 million worth of the underlying collateral, according to court documents filed Nov. 10 in Michigan.
The lawsuit filed by the bank alleges that Hometown breached its “loan and security agreement and Taylor breached his security” by failing to make timely payment of the reductions and holding the mortgage at the warehouse facility for longer than the permitted term.
Court documents show that as of Oct. 31, Flagstar had nearly $2 million in pledged mortgages sitting in its warehouse beyond the time allowed, and more than $700,000 in overdue debt reductions.
According to the lawsuit, Flagstar and Hometown originally entered into a mortgage warehousing loan and security agreement in November 2020. To facilitate the advance, Flagstar and Hometown also entered into a separate revolving credit note, under which Flagstar agreed to loan up to $60 million to Hometown so that the lender could originate and fund certain residential mortgage loans. As of Oct. 30, Flagstar had provided Hometown with just over $20 million in upfront payments.
In late August, the bank flagged Hometown for multiple defaults on its obligations and subsequently issued a notice of default. Multiple attempts to contact Hometown and Taylor were unsuccessful, so Flagstar on Oct. 25 expedited the issuance of the revolving note, making $20 “immediately due and payable,” the suit says, and terminated the warehouse line with the lender.
Hometown Lenders and Billy Taylor did not respond to requests for comment. Flagstar declined to comment.
Flagstar claimed to have “incurred losses in excess of $20 million due to mounting interest, fees and expenses.” The company is asking a Michigan court to grant it “the right to foreclose on Flagstar’s liens and collateral security interest” and to “perform a full accounting and audit of all financial transactions during the relevant time periods.”
Hometown, which Recently transformed into a broker modelfacing fierce criticism from all sides Former employees and branch managers.It has also had its license revoked in California and Washington state.
Washington state regulators accused Hometown of collecting FHA mortgage insurance premiums from the loans and failing to remit the advance payment within 10 calendar days of the mortgage closing, as required by law.
Meanwhile, the IRS has issued a federal tax lien notice in the amount of $942,797, according to a recent filing. More than $600,000 in taxes is owed from 2020, and nearly $300,000 is owed for the tax period ending June 30, 2023. The manager on the hometown case did not respond to a request for comment.