Florida Mortgage Broker Faces Bankruptcy

A large South Florida mortgage brokerage has become the latest casualty of a turbulent housing market that is leaving businesses and consumers in its wake by the score.

TransLand Financial Services Inc., a Florida mortgage broker, is now the subject of an involuntary Chapter 11 bankruptcy petition filed by three banks.

The subject of the petition is the fact that it failed to remit at least $22.9 million of Florida home loan payoffs and other payments.

The petition was filed Thursday with the U.S. District Court for the Middle District of Florida by TierOne Corp, Federal Trust Bank and MidCountry Bank, court records show.

TierOne said that the Florida mortgage broker owes at least $12.9 million, while MidCountry seeks at least $7.6 million, and Federal Trust at least $2.4 million.

In a U.S. SEC filing, TierOne said that it replaced TransLand as the servicer of some residential construction Florida home loans, and in that transfer, it “uncovered evidence of the alleged fraud.”

TierOne said it is insured up to $7.5 million against fraudulent losses by loan servicing agents, and that its insurance carrier has been notified of a potential claim.

The company does not expect the matter to materially affect results.

A representative for TransLand, based in Maitland, Florida, said that company executives were not immediately available for comment.

SOURCE: Reuters