DISB Creates Consumer Protection and Advocacy Task Force
In its continued efforts to protect District residents in the financial-services arena, DISB recently created a Consumer Protection and Advocacy Task Force. Its main goal is to leverage the collective knowledge, skills and abilities of the agency, so it can continue to provide targeted information to consumers.

As a consumer protection agency, it is the responsibility of the entire agency to be involved in the fight to protect the DC consumer; and to bring the resources of each bureau and office together to produce quality work. It is DISB’s intention that the task force will be able to complete specific consumer protection projects identified for FY 2009. These include the following:

• An annual consumer complaint report, which outlines the areas that generate the most complaints in the agency, what types of complaints, and how DISB resolves them.
• An annual mortgage foreclosure report, outlining the areas in the city where the foreclosures may be found, by ward, by addresses, the mortgage broker or lender involved and other specific details.
• A quarterly newsletter on current consumer protection and advocacy issues.
• Develop infrastructure to support the District of Columbia Financial Literacy Council.
• Develop a directory of industry trade groups, financial service providers, consumer protection groups and community based organizations to promote DISB’s consumer protection and advocacy activities.
• Develop one signature consumer protection and advocacy program for each financial services industry DISB regulates.
• Produce a best practices report on government consumer protection websites.
• Modify DISB’s website to have more consumer friendly information.

The task force has been broken down into four working groups, which will tackle each of these areas: consumer complaints, mortgage and foreclosure, consumer protection initiatives, and the investor protection workgroups. DISB’s Consumer Protection Advocate will head up the task force, working with agency directors, managers and staff, to research some of the most pressing consumer issues in the District of Columbia. DISB will generate newsletters and press releases on research findings.

Investor Education in Your Community Seminar Series

Staff Assistant Gwyn Jackson
assists an attendee with registration.

DISB recently concluded its first “Investor Education in Your Community Seminar Series,” a free non-commercial program that sought to address the issue “How Can I Afford Retirement?”  The series garnered an audience of about 150 participants. They received information on planning for retirement, calculating social security benefits, how to avoid becoming victims of financial fraud and much more. Attendees indicated they would recommend the program to others. DISB plans to hold another investor education series this spring.

President Obama’s Regulatory Reform Plan
On June 17, 2009, President Barack Obama laid out a comprehensive regulatory reform plan to modernize and protect the integrity of the country’s financial system. While this crisis has had many causes, it is clear now that the government could have done more to prevent these problems from growing out of control and threatening our overall economy.

The President was joined by Treasury Secretary Tim Geithner, representatives from the regulatory community, consumer groups, the financial industry and members of Congress as he laid out the ambitious plan.
The President’s plan will:

• Promote Robust Supervision and Regulation of Financial Firms. It will require that all financial firms that pose a significant risk to the financial system at large are subjected to strong consolidated supervision and regulation.
• Establish Comprehensive Regulation of Financial Markets. Increase market discipline and transparency to make markets strong enough to withstand system-wide stress and the potential failure of one or more large financial institutions.
• Protect Consumers and Investors from Financial Abuse. Rebuild trust in the markets by creating the Consumer Financial Protection Agency to focus exclusively on protecting consumers in credit, savings, and payment markets.
• Provide the Government with the Tools it Needs to Manage Financial Crises so it is not forced to choose between bailouts and financial collapse.
• Raise International Regulatory Standards and Improve International Cooperation and coordination.

NAIC Praises Preservation of State Regulation Under Obama Administration’s Plan

The National Association of Insurance Commissioners (NAIC), of which DISB is a member, commended President Obama and the Treasury for proposing a plan June 17 to help improve stability and supervision of the financial sector, while preserving the role of states as regulators of insurance.

“While no one proposal is completely perfect, our initial read of the administration’s financial overhaul plan seems to reflect what is most important to us: preserving the consumer protections and financial solvency oversight of the historically strong and solid system of state-based insurance regulation,” said NAIC Chief Executive Officer Therese (Terri) M. Vaughan, Ph.D.

“State regulation’s strong solvency system and consumer protections have served consumers well, as evidenced by the relative stability in the insurance markets. The proposal appropriately focuses on the problems that need fixing, by addressing systemic risk and other regulatory gaps. We are pleased that a council of regulators with functional expertise is included in the proposal, but urge inclusion of state insurance regulators to offer expertise and information on the insurance markets. We will continue to work with Congress and the Administration to underscore the benefits of the current insurance regulatory system. Consumer protection has been, is and will remain priority one for state insurance officials. We advocate for insurance consumers and objectively regulate the US insurance market, relying upon the strength of local, accountable oversight and national collaboration.” Formed 1871, the NAIC is a voluntary organization of the chief insurance regulatory officials of the 50 states, the District of Columbia and five US territories.

NASAA Releases Statement on Financial Regulatory Reform Proposals
The North American Securities Administrators Association (NASAA), of which DISB is a member, recently put out a statement on the release of the Obama Administration’s comprehensive plan to restructure the system of financial services regulation in the United States to better protect American investors and consumers.

“Restoring investor confidence in the integrity of our nation’s financial markets is an enormous and vital undertaking,” said NASAA president, and Colorado Securities Commissioner Fred Joseph. “President Obama has released policy proposals to develop a financial regulatory structure designed to work for businesses, consumers and investors. These proposals recognize the value of state securities regulators in this national priority.”

President Obama’s plan has five key objectives that align closely with the five core principles for regulatory reform released by NASAA late last year to strengthen and enhance the protection of the nation of investors: (1) preserve state/federal collaboration while continuing to streamline the regulatory system where appropriate; (2) close regulatory gaps by subjecting all financial products and markets to regulation; (3) strengthen standards of conduct; (4) improve oversight through better risk assessment and interagency communication; (5) and toughen enforcement and shore up private remedies, according to Joseph.

“The administration has recognized our concerns in a number of areas, particularly calling for a council of regulators to assist the Federal Reserve in monitoring risk throughout our financial system; addressing the pressing need for a fiduciary standard of care for broker-dealers providing investment advice and calling for legislation empowering the Securities and Exchange Commission to prohibit mandatory arbitration clauses in broker-dealer and investment adviser contracts with retail investors. “While the Administration’s proposals offer a positive first step in the right direction to monitor financial risks and to close the regulatory gaps that contributed to the current financial crisis, NASAA will continue to seek to ensure that state securities regulators have a salient role in this oversight process as it develops and moves forward.”

NASAA is the oldest international organization devoted to investor protection. Its membership consists of the securities administrators in the 50 states, the District of Columbia, Puerto Rico, the US Virgin Islands, the provinces and territories of Canada, and Mexico.

CSBS Issues Statement on Financial Regulatory Reform Plan
The Conference of State Banking Supervisors recently put out a statement on President Obama’s plan.  
 
The financial regulatory reform plan released by the Obama administration would make significant changes to our nation’s system of financial oversight. As the United States struggles to emerge from an economic crisis, CSBS believes it is prudent to review our regulatory structure in an effort to make alterations that will enhance the strengths of our unique system of oversight and limit our vulnerability to inevitable future market downturns, according to Neil Milner, president and CEO.

The administration’s plan is a strong endorsement of the value of the dual-banking system. Preserving the role of state authorities as a check to federal authority will prevent industry consolidation into a handful of megabanks that are too big to regulate and too big to fail. Preservation of the state system of financial supervision protects the greatest strength of our financial system: the diverse industry it makes possible. The plan also protects our long-standing coordination with the Federal Reserve and FDIC in supervising state charted banks. With enhanced oversight, higher capital requirements, and the ability to resolve failed firms, our economy and consumers should no longer be held hostage by firms which are too big to fail.
 
Our nation’s financial system is comprised of well over 8,000 insured financial institutions ranging in size from just over $1 million in assets to $1.6 trillion in assets.  The industry not only serves customers around the globe, but in local and rural communities, guaranteeing all Americans sufficient access to credit and financial services, regardless of the size of their local community.  This range of institutions, however, provides more than just local convenience. The diversity provides resiliency and durability. 
 
The diverse nature of our financial system provides fuel to our economy in the boom times, and sustains our economy during the busts. The administration’s plan establishes a new Consumer Financial Protection Agency. We appreciate that the plan recognizes the resources and experience state authorities bring in terms of enforcement and identifying emerging trends. Unfortunately, the administration has had to pursue this type of solution to correct a decade of federal regulatory preemption of state consumer protection laws which left consumers vulnerable. We have consistently called for greater coordination and cooperation among the existing state and federal agencies in determining and applying applicable law.  Had these calls been answered, federal policymakers would have heard the early warning provided by state enforcement actions and state predatory lending laws.
 
We are very concerned with the proposed agency’s structure and independence from prudential regulators. These two regulatory priorities are not in irreparable conflict with one another. Instead, we believe the exact opposite is true and these two goals rely upon one another. Enhanced coordination among regulatory agencies is needed to maximize the expertise, resources, and differing perspectives offered by multiple regulators. This is the formula for providing strong consumer protection standards and ensuring a healthy and vibrant financial system. We are committed to working with the administration and Congress to provide a coordinated and effective structure for consumer protection.
 
The states, through CSBS, look forward to working with the administration, Congress, and our federal counterparts as financial regulatory reform is further considered and debated. The Conference of State Bank Supervisors (CSBS) is the nationwide organization for state banking, representing the bank regulators of the 50 states, the District of Columbia, Guam, Puerto Rico and the Virgin Islands, and approximately 6,000 state-chartered financial institutions.

DISB Assists Residents with Benefits
DISB, the District regulator for the financial-services industry, also assists residents who may have problems with any of the financial agencies it regulates. Among those that DISB helped was a District resident who was laid off September 30, 2008. She paid her COBRA premiums through March 2009. On April 16, 2009, her group plan was terminated due to the non payment of premium by her former employer, leaving her without health insurance. Initially, the health insurer would not allow her the option of paying her COBRA premium directly to it since the grace period had expired. DISB intervened and assisted the resident in obtaining a group conversion policy for District residents for the continuation of her healthcare benefits. This was especially key for the resident who has an illness.

In another case, the complaint involved non-payment of a life policy death benefit. The death certificate listed a terminal illness as a possible cause of death. The policy was underwritten in June 2006 with the contestable period completed as of June 2008. The insurance company contended that it was a fraudulent application. DISB intervened, and the file was forwarded to the Maryland Insurance Administration for jurisdictional purposes. The company ultimately issued the payment of about $90,000 to the beneficiary.
 
Any District resident seeking help on any insurance, investment or banking and mortgage-related matters, should call DISB to file a complaint at (202) 727-8000 or visit the website.

DISB in the Community

DISB Cares Team     The DISB Cares Team has been participating in the Komen Global Race for the Cure ®  for the last six years. June 6 marked the 20th annual running of the series in Washington, DC, which was formally known as the Komen National Race for the Cure. DISB Cares Team raised more than $1,555 for breast cancer research.

DISB is at the Capital Pride Festival   DISB's Senior Insurance Operations Specialist Carolyn King addresses a consumer at the Capitol Pride Festival and Parade June 14 on Pennsylvania Avenue, NW. This festival showcases the strides and culture of the LGBT community.

DC Saves Financial Fair
During the District’s third Financial Literacy Month in April, DISB hosted a 30-minute workshop on COBRA (Consolidated Omnibus Budget Reconciliation Act) at the DCSaves Financial Fair, sponsored by the Capital Area Asset Builders. COBRA provides workers who have recently lost their jobs with an opportunity to maintain the health benefits package provided by their former employer for an additional six months. Commissioner Thomas E. Hampton addressed the recently enacted federal stimulus law, which amended COBRA, to reduce the cost of this health coverage to displaced workers by 65 percent.

Upcoming Events July Financial Literacy and Our Regulatory World —Wednesday, July 8, 2009, from 11 am to 1 pm, DISB offices, 810 First Street, NE, Suite 701. DISB will host 10 youth at the agency, who will learn about financial literacy in terms of how the agency regulates. Career Technical Institute Job Fair —Wednesday, July 15, 2009, from 10 am to 2 pm, One Washington Circle Hotel, One Washington Circle, NW. DISB will attend this event to discuss the agency’s services with attendees. Brightwood Day 2009 —Saturday, July 18, 2009, noon – 6 pm, Piney Branch Road, NW (off Georgia Avenue – between Tuckerman and Sheridan Streets). DISB will have a table to provide information on its consumer protection services. Canto Por la Paz: Comunidades Saludables  (Asking for Peace – Healthy Communities) —Sunday, July 19, 2009, 10 am—4 pm (No Raindate). Department of Parks and Recreation Parking Lot, 3149 16th Street,  NW. Staff will interact with Spanish-speaking constituents, providing information and answering questions at this Mayor’s Office of Latino Affairs-sponsored event. 2009 BusinessPremier Small Business Award —Wednesday, July 22, 2009, 8:30 am –11 am. Willard InterContinental Washington, 1401 Pennsylvania Avenue, NW. DISB is a cosponsor of this awards ceremony hosted by the Washington, DC Economic Partnership. Commissioner Hampton to give remarks. First Annual DC City-Wide Youth Conference —Thursday, July 30, 2009, 11:15 am – 8 pm. Holy Name Catholic Church, 920 Eleventh Street, NE. The agency will reach out to young people at this event, sponsored by the DC City-Wide Coordinating Council on Youth Violence Prevention and Holy Name Catholic Church. August In August, the District marks its fifth annual Financial Fraud Awareness Month, from August 23 to 29, 2009. The agency will also be on hand at several events to provide information as DISB believes that financial education is key in helping to combat financial fraud, as well as helping maintain financially sound habits. Check the agency calendar online for further update. Community Foreclosure Prevention Clinic —Saturday, August 1, 2009, 10 am to 2 pm, Israel Baptist Church, 1251 Saratoga Avenue, NE. DISB will lead a presentation on foreclosure scams and have an exhibit booth to present its resources for those experiencing foreclosure. Senior Fraud Presentation —Tuesday, August 4, 2009, 1 pm at 2812 Pennsylvania Avenue, SE. DISB will make a presentation on preventing financial fraud for seniors. This event is sponsored by So Others Might Eat. Investment Fraud for Seniors Presentation —Wednesday, August 26, 2009, 11:30 am to 1 pm. DISB will host a signature seminar for seniors on investment fraud at the Washington Seniors Wellness Center, 3600 Alabama Avenue, SE. This a DISB event.

Former DISB Staffer Recognized At Law Enforcement Ceremony
Former DISB Enforcement and Investigation Investigator Annette Beresford was recognized by the United States Attorney for the District of Columbia for her outstanding efforts during a joint DISB-FBI-IRS investigation prosecuted by the US Attorney’s Office. About 154 investigators, special agents, detectives, police officers and other members from various federal, state and international law enforcement agencies were honored during the 29th Annual Law Enforcement Awards Ceremony, sponsored by the US Attorney’s Office. It was held May 28 at the Caucus Room in the Cannon House Office Building in the District of Columbia.

More than 350 people attended to see Beresford, FBI agent Kelly Bender and IRS-CID agent Ron Williams recognized for their work on a $1 million fraud scheme where the defendant stole real estate properties from the elderly and deceased victims. These three investigators uncovered a scheme where Duane McKinney obtained titles to 15 District and Maryland properties through forged deeds (those purported to be signed by the owners transferring the properties to McKinney or his shell business). However,  the deeds were not signed by the owners as the vast majority of the owners were deceased at the time of the forgery.

Beresford tracked public records, which showed that once the deeds were notarized, McKinney sold the properties as if they belonged to him or his business. She also traced the money from the sales and found that McKinney spent the money on high end items, such as luxury vehicles. The other investigators obtained a confession from a notary, who admitted that he notarized the forged deeds, falsely stating that he saw the owner sign the deeds as grantor and that the owner “personally appeared before him.” All three investigators worked with the victims of the case; those who bought the homes lost some or all of their purchase money, while others whose families owned the homes for generations lost their properties or were required to file suit against McKinney to quit title. The notary pleaded guilty just before trial. The jury found McKinney guilty of mail and wire fraud, illegal monetary transactions and theft. At sentencing, he was ordered to pay more than $900,000 in restitution, to forfeit three luxury vehicles and two real properties and to spend more than 12 years in prison.

Jeffrey A. Taylor, in one of his last official acts as the United States Attorney for the District of Columbia, presided over the event, which included the Presentation of Colors and music by the U.S Capitol Police. Each recipient received a wooden plaque with an engraved acknowledgment of their achievement. Photographs were taken with US Attorney Taylor, the Assistant United States Attorney, who prosecuted the case and nominated the investigators, as well as an executive representing the recipients’ agencies.

Going Green for Homeowners
The green movement has taken over the nation’s capital—from recycling to solar panels—District residents are doing more to help protect the environment. For many homeowners, that includes plans to make their homes more green with renovations. If considering environmentally friendly updates to your property, DISB wants residents to understand how those modifications are covered under their homeowners insurance policy. DISB is providing these tips to help make your home—and your insurance—more green.

According to DISB Commissioner Thomas E. Hampton, the agency is providing these tips so homeowners considering green changes will be aware about the effects on their insurance policies; and before they get an unpleasant surprise from an insurance provider who may not want to pay a claim. “DISB has also joined the green movement, by eliminating license renewal letters for insurance companies, choosing instead to remind them by e-mail,” Commissioner Hampton said.

• Standard Homeowners Insurance
  A standard or non-green homeowners policy generally provides coverage for either the actual cash value or replacement value of property with standard building materials. Actual cash value pays for damages equal to the replacement value of the damaged property minus depreciation. A replacement value policy generally provides repair or replacement at the same level of quality as the current value, with no deduction for depreciation, subject to the policy limits. If the home was built to meet certain environmental standards, homeowners should confirm the policy specifically provides replacement to that same environmental level so that you won’t have to pay extra out-of-pocket costs to reach those same standards.
• Green Homeowners Insurance
  Some of the first green homeowners policies could only be purchased for new homes that were certified as meeting climate and zone specific construction standards for energy such as LEED certification. Green homeowners policies written more recently cover varying degrees of green repairs. A green homeowners policy is one that covers rebuilding a damaged home to green standards. Some policies will allow you to repair the home using green materials, but will have a cap on covered costs. Others may exclude coverage of items such as the fees charged by inspectors for having your home certified or re-certified as green. These policies generally cover the costs of environmentally friendly materials and low environmental-impact processes, as well as energy-efficient replacement products and materials. Green renovations may help lower costs on utility bills and even taxes. They may even lower premiums on homeowners insurance. Green policies are not yet available in all states, so check DISB to find a company licensed to write a green policy in the District of Columbia.
• Green Energy Insurance
  Before selling excess solar or wind-generated energy to your local utility company, there are insurance inquiries you should make. Interconnection or net-metering allows you to sell energy overages to a local utility company. Net-metering requires that utility companies credit and bill energy for the same unit price; thus the meter will run backward when you are selling energy by the same unit measure as when it runs forward. Most governmental bodies either require or strongly encourage homeowners to acquire and maintain additional liability insurance while their energy contract is in force. Be aware that municipalities might require you to reimburse it for any loss arising out of net-metering incidents that harm their workers or damage their property. Check with the District of Columbia government for insurance requirements, before entering an energy agreement with a local utility.

For more information on green-related insurance issues in the District of Columbia, visit our website.

Nearly Half of US Servicemembers Confident About Retirement
While nearly half of US servicemembers are confident about their ability to retire comfortably, 22 percent are unaware of the Thrift Savings Plan (TSP)—the federal government’s equivalent of a 401(k) plan—according to a new survey funded by the Financial Industry Regulatory Authority (FINRA) Investor Education Foundation. The Military Financial Confidence Survey (MFCS)—conducted by the foundation in cooperation with the Employee Benefit Research Institute® (EBRI) and Mathew Greenwald & Associates—shows that 47 percent of servicemembers report feeling either very confident or somewhat confident about their ability to retire comfortably.

The survey highlights the importance of giving servicemembers educational tools to prepare for their retirements, according to John Gannon, president of the FINRA Foundation. The fact that over one-in-five servicemembers are unaware of the TSP, the retirement savings vehicle available to every servicemember, underscore the need to help them take advantage of every opportunity to save for a comfortable retirement. While 25 percent of servicemembers say saving for retirement is their most pressing financial issue, the MFCS found that immediate financial problems were of far greater concern to servicemembers, with 29 percent saying paying down debt and 18 percent saying making ends meet was their most pressing financial issue.

The FINRA Foundation’s MFCS suggests that doing a retirement needs calculation may lead to having a more realistic savings goal, since the amount of retirement savings believed necessary was higher among those who had performed a retirement savings calculation than among those who had not. The FINRA Investor Education Foundation is the largest foundation in the United States dedicated to investor education. Its mission is to provide investors with high-quality, easily accessible information and tools to better understand the markets and the basic principles of saving and investing. In 2006, the Foundation launched a program to expand the saving and investing knowledge of military servicemembers and their spouses, including a free, unbiased resource, www.SaveAndInvest.org. A partner in the Department of Defense Financial Readiness Campaign, the foundation also presents financial education forums at military installations worldwide. In 2009, DISB began doing outreach to the military for the first time.

New Renters’ Rights in Foreclosure
Renters whose landlords fall into foreclosure will have new protections from evictions under new legislation signed by President Barack Obama in May. The new law, the Helping Families Save Their Homes Act, provides renters with a minimum of 90 days notice before tenants must vacate a property. Renters must now be allowed to remain in their homes for the duration of their lease—even if the home is being foreclosed on. If a buyer plans to use the property as his primary home, or the tenant’s lease is month to month, or there is no lease at all, the tenant is entitled to at least 90 days notice. Also, renters must now be allowed to remain in their homes for the duration of their lease, even if the home is being foreclosed on. This also applies to Section 8 tenants. These new tenant protections are effective immediately and expire December 31, 2012. For more information contact the National Low Income Housing Coalition at www.nlihc.org.

DISB Urges Residents to Report Elder Abuse
In recognition of World Elder Abuse Awareness Day June 15, 2009, DISB urged residents to value and protect District of Columbia’s seniors by reporting possible abuse.

Although elder abuse comes in many forms—physical, financial, emotional, neglect or abandonment—often several types of abuse will be inflicted at the same time, according to DISB Commissioner Thomas E. Hampton. Financial abuse is considered to be the most common form of abuse to elders, costing its victims an estimated $2.6 billion a year. To help fight this problem, DISB joined the North American Securities Administrators Association and the National Adult Protective Services Association who are partnering to offer tools to identify and report financial abuse or exploitation. Investment fraud is an area of particular concern, as victims can see their life savings depleted with little opportunity to recover financial stability. The investment might be fraudulent, or it could be a legitimate product that is unsuitable for the investor’s circumstances. Other investment problems include unregistered products, theft of funds or products sold by an unlicensed adviser or broker.

Investors and caregivers are urged to “investigate before investing” by calling DISB at (202) 727-8000 to verify if the product and person selling it are registered/licensed and if there have been any complaints. They may also visit the agency’s Web site at www.disb.dc.gov. Securities or investment fraud should be reported to DISB at (202) 727-8000 and ask for the Securities Bureau or the Enforcement and Investigation Bureau. Other types of elder abuse should be reported to the District of Columbia’s Adult Protective Services at (202) 541-3950 or to local authorities

Extensive Background Information on Stockbrokers and Investment Advisers Offered
The Madoff Ponzi scheme and other high-profile breaches of trust by financial professionals are strong reminders of the need to check the background of financial professionals before you trust them with your money, DISB said recently. Information is an investor’s best defense against investment fraud, according to DISB Commissioner Thomas E. Hampton. “The information you need to make an informed choice about who you entrust with your money is right at your fingertips,” he said. Our office should be your first call for detailed background information about your stockbroker or investment adviser. And the time to make that call is before you turn over any money.”

DISB offers investors extensive employment, disciplinary and registration information about their stockbroker or investment adviser. As an investor, you can request a public report of background information on any stockbroker, brokerage firm, investment adviser and investment adviser firm registered to do business in the District of Columbia.

To receive background information about a stockbroker, call DISB at (202) 727-8000 and ask for all materials from the Central Registration Depository (CRD) about that individual. For similar information about an investment adviser, ask for all materials from the Investment Adviser Registration Depository (IARD). These computerized national databases contain licensing and registration information on more than 650,000 stockbrokers and over 260,000 investment advisers. You can also receive information on their employment, examination and disciplinary histories, civil judgments, arbitration decisions, criminal convictions or indictments, bankruptcies, as well as pending complaints, disciplinary actions, arbitration and civil proceedings.

DISB Announces Multi-State Agreement with TBW Corporation
DISB in late June signed a major agreement with Taylor, Bean & Whitaker Mortgage Corporation (TBW) regarding its mortgage lending practices for “nontraditional” loans made in the District of Columbia. This agreement will result in a detailed review of TBW’s nontraditional loan practices, the adoption of the federal loan modification program to assist struggling homeowners, and the payment of $9 million to assist the states and the District of Columbia in their oversight of mortgage origination practices.

The agreement between TBW and 14 state mortgage regulators follows a coordinated multi-state examination of TBW to specifically determine compliance with laws and regulations pertaining to the origination of nontraditional mortgage loans in 2006. These products, also referred to as “alternative,” or “exotic” mortgage loans, include “interest-only” mortgages, “payment option” adjustable-rate mortgages, and stated income loans. The examination alleged exceptions relating to TBW’s underwriting standards, compliance and risk management practices, and internal control procedures pertaining to these loans. Alleged practices included multiple submissions of loan applications by third-party originators through automated underwriting programs resulting in altered income and asset information for prospective borrowers in order to qualify applicants for mortgage loans. Concern over these practices led TBW to stop offering nontraditional mortgages in early 2007 and to make other changes to its internal control processes.

Consumers do not need to take any action at this point to pursue a loan modification. As part of the agreement, TBW will reach out to impacted consumers who qualify for the Making Home Affordable program. Consumers may visit the Web site established by the Treasury Department at makinghomeaffordable.gov, to check their eligibility for a loan modification. Based in Ocala, Fla, TBW is currently one of the 10 largest wholesale mortgage lenders in the United States. 

For more information, contact, Melissa Spata, 315 NE 14th Street, Ocala, FL 34470
Office: (352) 671-0178   Fax: (352) 690-0878   mspata@taylorbean.com