Reuters: Bankruptcy News: Ocala Funding files bankruptcy, seeks to examine FHFA

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Ocala Funding files bankruptcy, seeks to examine FHFA Jul 10th 2012, 23:57 Tue Jul 10, 2012 7:57pm EDT * Ocala once controlled by Taylor, Bean & Whitaker * Funding vehicle seeks to examine FHFA, Freddie Mac * Ocala says wants to examine $805 million transfer * FHFA declines immediate comment By Jonathan Stempel July 10 (Reuters) - A funding vehicle once controlled by the now defunct mortgage lender Taylor, Bean & Whitaker Mortgage Corp filed for bankruptcy protection on Tuesday, and called for an examination of the federal regulator that oversees Freddie Mac. Ocala Funding LLC filed for Chapter 11 protection less than one month after a federal appeals court upheld the April 2011 conviction of former Taylor Bean Chairman Lee Farkas, who is serving a 30-year prison term for being what prosecutors called the mastermind of a $2.9 billion bank fraud. According to a filing by Ocala with the U.S. bankruptcy court in Jacksonville, Florida, Ocala was established to buy Taylor Bean mortgage loans and then sell them to third parties, mainly Freddie Mac. Ocala said that from September 2008 until Taylor Bean collapsed in August 2009, Farkas and other Taylor Bean employees schemed to defraud it and its creditors by arranging to transfer about $805 million to Freddie Mac. These transfers "provided no benefit to Ocala and were executed with the intent of hindering, delaying and defrauding Ocala's creditors," the filing said. Neil Luria, Ocala's chief restructuring officer, in a separate filing said the company's liabilities exceed its assets by more than $2 billion, and that nearly half of the shortfall is the result of the asset transfers. In seeking an examination, Ocala asked for court permission to subpoena documents and question FHFA and Freddie Mac officials over "potential fraudulent transfer and other claims," with a goal of recovering more assets for creditors. The FHFA is the conservator for Freddie Mac and Fannie Mae , which the federal government seized on Sept. 7, 2008 amid mounting losses from mortgages and the U.S. housing slump. An FHFA spokeswoman declined immediate comment on Ocala's request for an examination. Taylor Bean had been the 12th-largest U.S. mortgage lender. Prosecutors said Farkas' fraud led to that company's bankruptcy and the collapse of Colonial BancGroup Inc, a large southeastern U.S. bank. Meanwhile, the FHFA last year filed 17 lawsuits against banks to recover losses suffered by Fannie Mae and Freddie Mac on about $200 billion of mortgage debt. Those cases are still being litigated. Taylor Bean had been based in Ocala, Florida. Ocala Funding is based in Orlando, Florida, according to its bankruptcy petition. The case is Ocala Funding LLC, U.S. Bankruptcy Court, Middle District of Florida, No. 12-04524. Link this Share this Digg this Email Reprints

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