Hometown Lenders' former warehouse lender Flagstar Bank is suing the shop and its owner, Billy Taylor, for "wrongful conduct" of defaulting on a warehouse line. This adds another suit to an already ample queue of
Flagstar is seeking to recover subject collateral in the amount of $21 million, per court documents filed Nov.10 in the state of Michigan.
Hometown has breached its "loan and security agreements and Taylor has defaulted under his guaranty" by failing to pay timely curtailments and holding pledged mortgage loans in the warehouse facility beyond the permissible period, a suit filed by the bank said.
As of Oct. 31, almost $2 million of pledged mortgage loans were sitting on Flagstar's warehouse line past the permissible time and over $700,000 was owed in past due curtailments, court documents show.
According to the litigation, Flagstar and Hometown originally entered into a mortgage warehousing loan and security agreement in November 2020. To facilitate the advances, Flagstar and Hometown also entered into a separate revolving credit note, under which Flagstar agreed to loan Hometown up to $60 million so the lender could originate and fund certain residential mortgage loans. As of Oct. 30, the amount of Flagstar's advances to Hometown amounts to a little over $20 million.
In late August, the bank flagged multiple instances of Hometown not meeting their obligations, after which a notice of default was issued. Numerous attempts to contact Hometown and Taylor were unsuccessful, so Flagstar, on Oct. 25, accelerated the revolving note making the $20 million "immediately due and payable" and terminated its warehouse line with the lender, the lawsuit said.
Hometown Lenders and Billy Taylor did not respond to a request for comment. Flagstar declined to comment.
Flagstar claims to have "suffered damages" greater than $20 million "as interest, fees, and expenses have continued to accrue." It is asking the Michigan court to award it a "foreclosure of Flagstar's lien and security interest in collateral" and a "full accounting and audit of all financial transactions within the relevant time period."
Hometown, which
Regulators in the state of Washington accuse Hometown of collecting FHA mortgage insurance premiums from loans and not remitting the upfront payments within 10 calendar days of the mortgage closing, as is required by law.
Meanwhile, the Internal Revenue Service has issued a notice of a federal tax lien in the amount of $942,797, according to a recent filing. Over $600,000 is owed from 2020 and close to $300,000 is owed for the tax period ending June 30, 2023. The IRS manager in charge of the Hometown case did not respond to a request for comment.
