After getting cooperation from Island Mortgage Network, the New York State Banking Department has postponed the Melville, N.Y., lender's license revocation hearing.
The hearing, which was to take place Tuesday of this week, is now set for July 25. Island Mortgage has agreed to surrender its license sometime before that date, and the hearing will be canceled if the company honors that agreement.
Meanwhile, the bricks-and-mortar subsidiary of AppOnlin.com is finally letting examiners check its records, and it cannot conduct any new business in the United States, a Banking Department spokesman said. AppOnline.com is still doing business.
Calls to Island Mortgage and AppOnline.com were not returned.
The postponement is a slight reprieve for a company that has been under siege from banking regulators and creditors for a month. On June 29 the American Stock Exchange halted trading on AppOnline.com. One day later the Banking Department suspended Island Mortgage's license after charging that the company had failed to meet its financial responsibilities and had refused to give examiners access to its records or otherwise cooperate.
Still, its troubles appear far from over.
In addition to allegedly doing business after its lines of credit had been terminated, Island Mortgage is charged with canceling checks it issued to mortgagees and sellers of properties after closings, while still collecting fees on the loans. It has collected fees on $150 million of loans that have not yet closed, according to the Banking Department.
Though it appears that most of the buyers and sellers received payment and completed the transactions, Island Mortgage has left a trail of grievances by title and escrow firms that have been left holding the bag.
Old Republic National Title Company of Minnesota sued Island Mortgage on June 21, charging breach of contract, fraud, and negligent misrepresentation. It lost almost $800,000 in its dealings with the lender, it claims.
Todd Ewing, owner of Federal Title and Escrow Co. of Washington, said his company lost $110,000 in one transaction after Island canceled two checks to cover a mortgage it originated. The day after he received the first check, Mr. Ewing claims, he got a letter from Island Mortgage explaining that the first check had been canceled and offering a second one to cover the loan. That check also was canceled.
"They didn't fund the loan, and in the meantime we've made disbursements to the parties and are out $110,000," Mr. Ewing said. "The buyer's in the house, the seller's gone, and everybody's got their money except us." He said Island Mortgage will not take his phone calls and has been "completely unresponsive." He said he plans to file a lawsuit in New York or Washington.
Island Mortgage operates 58 offices in 22 states and focuses on FHA, VA, and subprime loans.