FAQ  |  Search  |  Memberlist  |  Usergroups   |  Register  |  Profile  |  Log in to check your private messages  |  Log in 

 First Horizon View next topic
View previous topic



Post new topicReply to topic
Author Message
THE LOAN RANGER
Flash in the pan


Joined: 06 Mar 2008
Posts: 58

Complaint Alleges First Horizon Concealed Mortgage Fraud
PostPosted: Mon Jul 07, 2008 4:33 pm Reply with quoteBack to top

I wonder if this is having a negative impact on FHN Stock,,, now at 6.44?


Complaint Alleges First Horizon Concealed Mortgage Fraud

July 02, 2008: 03:57 PM EST


NEW YORK -(Dow Jones)- A former in-house corporate security investigator at a subsidiary of First Horizon National Corp. (FHN) is accusing the company of routinely concealing mortgage and banking fraud.

The former employee, Stephanie Jones, has filed a whistleblower claim at the Department of Labor alleging that the Home Loan Corp. unit of the Memphis-based bank holding company, which controls First Tennessee Bank, habitually ignored cases of mortgage and banking fraud committed by high-producing loan officers, and even concealed incidents by altering official filings sent to bank regulators.

Jones alleges First Horizon fired her in 2006 because she had uncovered and pursued illegal mortgage-lending practices. The complaint also stems from a prior charge of racial discrimination that Jones filed against First Horizon last year, a suit that remains open in a U.S. District Court in Dallas.

First Horizon made an exception to its policy of not commenting on pending litigation and called Jones's claims "outrageous." The company didn't address Jones's specific allegations, but said it "does not tolerate or conceal mortgage fraud" and that Jones filed her whistleblower claim only after the U.S. Equal Employment Opportunity Commission declined to pursue two of Jones's racial- discrimination claims. The company said it looks "forward to defending the claims in a court of law."

Borrowers, investors, and state attorneys general have accused large mortgage lenders of engaging in widespread mortgage fraud. Litigation to defend against these accusations could dog the earnings of lenders long after the mortgage crisis ends.

The complaint also offers a window into allegations of fast-and-loose mortgage lending practices. Lenders wrote and re-sold billions of dollars in loans that ended up in complex mortgage-backed securities, which have become the hallmark of the mortgage crisis and cost investors billions of dollars in losses. Many investors who purchased these securities are now examining the individual mortgages they contain for evidence of fraud.

First Horizon has been badly hit by the mortgage crisis, and has recently shrunk its operations. The company's earnings fell 89% in this year's first quarter, and First Horizon shares have plunged to $7.98 per share in recent trading - a slide of more than 82% since the stock reached $44.72 in February of last year.

In her complaint against First Horizon, Jones is seeking unspecified damages, including lost wages as well as compensation for pain and suffering. All documents cited for this report were reviewed by Dow Jones Newswires.

Claims Of Widespread Fraud

In interviews and legal documents, Jones alleges she confronted a systematic effort by First Horizon managers to conceal mortgage fraud she uncovered while working at First Horizon Home Loan Corp.'s Irving, Texas, office from 2005 to 2006 as an investigator in the company's corporate-security department.

First Horizon recently agreed to sell more than 230 First Horizon Home Loan Corp. offices nationwide to MetLife Inc. (MET), in a deal set to close in the third quarter.

MetLife's spokesman, John Calagna, said, "We haven't seen the complaint, so we don't have any comment."

First Horizon's Home Loan Corp. grew rapidly during the last 10 years - from 151 offices in 1998 to more than 400 offices in 2005 - by originating a variety of mortgage products and re-selling them in the secondary market.

First Horizon Chief Executive Jerry Baker recently said First Horizon elected to sell the bulk of its Home Loan Corp. Offices because the lending operation had become unprofitable in recent quarters.

Jones alleges she uncovered approximately 50 cases of mortgage fraud at First Horizon. Many of those individual cases included multiple instances of fraud, she says, and one such case focused on a rash of fraudulent conduct at a First Horizon branch in Idaho.

In Idaho, says Jones, a loan officer conceded he had illegally altered loan documents, but told Jones that "everyone in the branch is doing it." Jones began investigating the branch when a regional underwriter at First Horizon raised concerns about the branch's practices.

The branch, says Jones, routinely submitted applications for borrowers for adjustable-rate loans that officers knew the borrower couldn't afford. One way they did this, Jones alleges, was to inflate borrowers' income on applications for "stated income" loans - or subprime loans that didn't require borrowers to prove their income - even though the officers had the borrowers' income-tax documents in a separate file, and those documents proved that the borrower didn't, in fact, qualify.

Jones's supervisor, David Scaff, a senior investigator at First Horizon, told Jones to stop her investigation, Jones alleges. "My manager didn't want me to pursue it" because, Scaff told Jones, the accused loan officer was "a disgruntled employee."

In another instance of fraud, Jones alleges, a top-producing loan officer at First Horizon fabricated and forged a lease agreement between an applicant and that applicant's mother, without either one's knowledge, in order to qualify the applicant for a loan.

Scaff declined to terminate that loan officer's employment, says Jones, which was part of a broader effort by management to protect the company's top-selling loan officers from damaging investigations.

"They allowed the loan officers - as long as they were raking in the money - to do whatever they wanted," says Jones.

Six weeks ago, Jones's attorney, Jim Walker, deposed Scaff and asked him about an internal memo from July 2006 that Jones sent to Scaff, Sheila Bramlitt, a director of corporate security, and other managers. In the memo, Jones wrote that she had "showed (Scaff) clear cases of fraud and altered documents." She alleged that Scaff "intervened or overrode" her investigations and in many cases took "no action at all."

Both Scaff and Bramlitt deferred their comments to First Horizon's response.

In a deposition, when asked if he had looked into Jones's claims that the company had ignored cases of fraud, he said, "I did not."

When asked if anyone at First Horizon was currently investigating those claims, Scaff said, "I am not aware." (Attorneys for First Horizon filed a petition on June 25 to clarify that statement to read "I don't know what was done.")

And finally, when asked if First Horizon should have investigated Jones's claims, Scaff said, "Yes."

Suspicious Activity Reports

Typically, banks must report to regulators any suspicious behavior by either employees or customers, through filings called "Suspicious Activity Reports."

Jones alleges First Horizon assigned two staffers to write up these reports for regulators, and pass them on to Bramlitt, the corporate security director. Bramlitt reviewed the reports before the company passed them on to regulators, Jones says.

When those reports included allegations of fraud by First Horizon loan officers, the reports "would come back changed" from Bramlitt's office, Jones says. Jones alleges Bramlitt typically removed from the reports any references to fraud committed by loan officers and typically directed the allegations toward loan applicants instead.

-By Marshall Eckblad, Dow Jones Newswires; 201-938-4306; marshall.eckblad@ dowjones.com

Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http:// www.djnewsplus.com/al?rnd=LW9w.....FuA%3D%3D. You can use this link on the day this article is published and the following day.


(END) Dow Jones Newswires
07-02-08 1557ET
Copyright (c) 2008 Dow Jones & Company, Inc.

_________________
HIGH-O-SILVER & AWAY WE GO!!
View user's profileSend private message
whatever
Dud?


Joined: 10 Jul 2008
Posts: 1

Re: First Horizon
PostPosted: Thu Jul 10, 2008 1:17 am Reply with quoteBack to top

watchdog wrote:
I was referring to the wholesale department of First Horizon providing a standard rate sheet, but then giving .50 point directly to the broker at the end of each month for volume. One arrangement had the Regional Manager in my area giving an extra .50 to his brother's company for delivering a lot of volume per month. In the neighborhood of 30 Million per month.


What broker are you referring to?
View user's profileSend private message
Robin
Sentinel


Joined: 30 Aug 2007
Posts: 3415
Location: Loveland, OH

Re: First Horizon
PostPosted: Wed Jul 30, 2008 9:52 pm Reply with quoteBack to top

Update posted: http://ml-implode.com/ailing/l.....02-04.html

170 Jobs / Back-Office operations gone. Sale price $400mil.

_________________
"A signature is a little text that can be added at the bottom of your posts." Folks who know ME know... I can't be limited to "a little" text. Twisted Evil or Snarky
View user's profileSend private messageSend e-mail
heretoday
Dud?


Joined: 30 Jul 2008
Posts: 9
Location: United States

Re: First Horizon
PostPosted: Wed Jul 30, 2008 11:37 pm Reply with quoteBack to top

Not the true story here. Remember that the MetLife sale was for the mortgage operations outside TN? These jobs being eliminated are the mortgage operations INSIDE Tennessee, serving Tennessee. Inside TN, everything going forward is being outsourced. First Tennessee will take the application - processing, underwriting, closing - all outsourced.
View user's profileSend private message
MortgageMan85
Wrecking crew


Joined: 10 Dec 2007
Posts: 1665
Location: Dallas

Re: First Horizon
PostPosted: Thu Jul 31, 2008 12:14 am Reply with quoteBack to top

heretoday wrote:
Not the true story here. Remember that the MetLife sale was for the mortgage operations outside TN? These jobs being eliminated are the mortgage operations INSIDE Tennessee, serving Tennessee. Inside TN, everything going forward is being outsourced. First Tennessee will take the application - processing, underwriting, closing - all outsourced.


Sounds like another bank entering the evil world of brokerage to me.

_________________
Mortgage Man in Texas

The difference between a successful person and others is not a lack of strength, not a lack of knowledge, but rather a lack of will.

Lombardi
View user's profileSend private messageVisit poster's website
MortgageMan85
Wrecking crew


Joined: 10 Dec 2007
Posts: 1665
Location: Dallas

Re: First Horizon
PostPosted: Thu Jul 31, 2008 12:16 am Reply with quoteBack to top

Claims Of Widespread Fraud

In interviews and legal documents, Jones alleges she confronted a systematic effort by First Horizon managers to conceal mortgage fraud she uncovered while working at First Horizon Home Loan Corp.'s Irving, Texas, office from 2005 to 2006 as an investigator in the company's corporate-security department.


What? A bank commiting fraud, I thought that was the evil domain of the broker.

_________________
Mortgage Man in Texas

The difference between a successful person and others is not a lack of strength, not a lack of knowledge, but rather a lack of will.

Lombardi
View user's profileSend private messageVisit poster's website
heretoday
Dud?


Joined: 30 Jul 2008
Posts: 9
Location: United States

The Bank and the Mortgage Company
PostPosted: Thu Jul 31, 2008 12:44 am Reply with quoteBack to top

really operated as two separate businesses under one big umbrella. The mortgage company got way too big for the bank. Vision flawed - new vision equally flawed.
View user's profileSend private message
Worldtraveller
Dud?


Joined: 17 Jun 2010
Posts: 4

Re: First Horizon
PostPosted: Thu Jun 17, 2010 7:56 pm Reply with quoteBack to top

Quote:
There is no way you are going to turn MetLife purchasing First Horizon Home Loans into a bad thing. Its good for us and its great for the industry.

Good for you, FH, and good for the industry.

That's nice, but what about all the homeowners whose mortgages got sold to essentially a collections agency? Our Credit rating dropped nearly 80 points in a week simply because of unscrupulous practices in mortgage sell off by FH.

But hey, glad your stock is going up. Rolling Eyes
View user's profileSend private message
cooper
Dyn-o-mite!


Joined: 11 Mar 2007
Posts: 491
Location: River City

Re: First Horizon
PostPosted: Thu Jun 17, 2010 11:26 pm Reply with quoteBack to top

Quote:
There is no way you are going to turn MetLife purchasing First Horizon Home Loans into a bad thing
I don't know, let me give a try ..... if ML had not purchased the loans AND the whole FH kit and kaboodle, then ..... they would just have shuttered all the branches. Can't say what FH did in Conneticut or New Hampshire or Oregon, but locally I believe they performed in a manner that painted a picture perfect example of what went wrong with their company. Given the opportunity i am positive the same people would again choose a path of greed and expediency in their day to day operation.

_________________
never forget
View user's profileSend private messageSend e-mail
formerlymtgguy4ever-2
Dyn-o-mite!


Joined: 14 Dec 2009
Posts: 327

Re: First Horizon
PostPosted: Fri Jun 18, 2010 7:54 pm Reply with quoteBack to top

wow. Am I the only one amazed that you guys are picking up a 2 year old thread and decided that now is a good time to slam the post? And for one of you, your first post no less. Dang, you must had to really dig for that one. Or you have a beef with FH/Met and did a search for all related threads.

Kind of a delayed reaction, wouldn't you say?
View user's profileSend private message
Display posts from previous:      
Post new topicReply to topic


 Jump to:   


Merge topics 

View next topic
View previous topic
You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot vote in polls in this forum




Powered by phpBB 2.0.22-2 (Debian) © 2001, 2002 phpBB Group :: FI Theme :: All times are GMT