Data Mortgage filed a lawsuit against Hometown Lenders in mid-December, forcing the lender to reckon with yet another litigation risk. All-in-all, Hometown potentially owes millions of dollars to
The correspondent loan buyer, which does business as Essex Mortgage, is accusing the Alabama-based shop of reneging on a purchase agreement made Jan. 10, 2023. As a result, it wants $700,000 in damages from Hometown.
Per Data Mortgage's suit, filed in the Superior Court of California, Orange County, the agreement with Hometown was that the lender would repurchase loans from the correspondent investor if the mortgages were sold or transferred within 210 days.
One such instance happened where a loan sale occurred "approximately 30 days later after issuance," which should trigger Hometown's repurchase of the mortgage. The buyback, however, did not take place, the suit alleges.
"Data Mortgage, Inc. asked Hometown Lenders, Inc. to repurchase its loan because the borrower's loan was not in place for 210 days. Hometown Lenders, Inc. has not repurchased the loans, despite over five requests to repurchase the loan," the suit said.
Billy Taylor, the CEO of Hometown Lenders, did not respond to a request for comment. Data Mortgage also did not respond to a request for comment.
A few weeks prior,
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.
Additional troubles brewing include allegations from a handful of
In total, there are at least 300 Federal Housing Administration loans originated by Hometown with unpaid MIP, according to filings by regulators in the states of Montana, Missouri, Maine and Alabama.
The Department of Housing and Urban Development and HUD's Office of Inspector General are aware of the situation, according to a government official.
