A Florida bankruptcy judge approved Taylor Bean & Whitaker Mortgage Corp.'s request to look at the books of Freddie Mac and question its officials, a decision that could affect a pair of related lawsuits involving the collapsed mortgage lender and some of Wall Street's biggest banks.
Judge Jerry Funk of the U.S. Bankruptcy Court in Jacksonville, Fla., said Friday that officials at Taylor Bean, which sold and serviced many of the mortgages that Freddie Mac owns, can pore over thousands of pages of documents and depose about a dozen Freddie Mac officials.
Funk's decision clears the way for Taylor Bean to subpoena Freddie Mac officials and question them about their business dealings with the Ocala, Fla., mortgage lender.
It also opens the door for questions about Ocala Funding, a mortgage conduit created by Taylor Bean, then the nation's 12th-largest mortgage originator. Ocala borrowed money for short periods to fund Taylor Bean's home loans before they were sold to Freddie Mac.
That unit is at the center of a legal battle between Deutsche Bank AG and BNP Paribas SA on one side and Bank of America Corp. on the other.
Deutsche Bank and BNP Paribas have each sued Bank of America in federal court in New York for allegedly failing to protect more than $1.7 billion in cash and mortgage loans that it was obligated to secure on behalf of the banks.
A Bank of America spokesman couldn't immediately be reached for comment. But the bank, which acted as the trustee for notes issued by Ocala, has denied responsibility and is seeking dismissal of the lawsuits.
Restructuring firm Navigant Capital Advisors has been running Taylor Bean since the company filed for bankruptcy. The Federal Deposit Insurance Corp., along with the banks involved in the New York suits, had joined the firm's bid to question Freddie Mac officials.
While the banks can attend the Freddie Mac depositions and question officials, the judge's order prohibits them from subpoenaing agency officials or documents.
Taylor Bean, once the nation's largest independent mortgage lender, collapsed last August amid the revelation that it was the target of an investigation by the U.S. Department of Justice and that Freddie Mac had ended its relationship with the company.
Other loans made by Taylor Bean were funded by Alabama's now shuttered Colonial Bank. Before its collapse, Taylor Bean and a group of other investors sought to pump $300 million into Colonial, which would have enabled Colonial to become eligible for a $550 million federal bailout. But the two sides failed to get regulatory approvals, and that plan was scuttled.
The FDIC, which is acting as the receiver for the shuttered Colonial, has said that Taylor Bean may have "double-pledged" $866 million in mortgage loans and kited millions more in loans between its bank accounts.
