Taylor Bean Said to Reach Deal in U.S. Mortgage LawsuitAlan Katz
Taylor, Bean & Whitaker Mortgage Corp.’s bankruptcy trustee is poised to settle a U.S. Justice Department lawsuit claiming the firm submitted fraudulent mortgages to the Federal Housing Administration, according to two people with knowledge of the pending agreement.
Taylor Bean and a mortgage lender it bought in 2009, Home America Mortgage Inc., have agreed to settle the false-claims lawsuit for about $320 million, one of the people said. The government will only receive a portion of those funds from the the defunct company, said the people, who asked not to be named because the agreement was still being circulated among the parties.
Taylor Bean, which originated $17 billion in home loans in the first half of 2009, filed for bankruptcy later that year as a $3 billion scheme involving fake mortgage assets unraveled. Six Taylor Bean executives were convicted and jailed for their roles in the fraud, including former chairman Lee Farkas, who is serving a 30-year prison term for conspiracy and fraud.
The final sum paid by Taylor Bean’s estate will be a percentage of the $320 million settlement based on the total value of claims against it. That could be as low as 2.5 cents on the dollar, the people said.
Two former employees who were based at Home America’s office sued the mortgage companies in 2006 under the False Claims Act. The Justice Department joined the lawsuit in 2010.
Linda Mansour, a spokeswoman for the Justice Department, and Jeffery Cavender, a lawyer listed for Taylor Bean on the case docket, declined to comment.