As with many financial institutions, Marco Community Bank suffered significant losses due to unpaid loans and foreclosures over the past two years. But Marco Community Bank is among one of the smallest to date to file a lawsuit against the mortgage lenders who may be responsible for the situation.

MCB (stock symbol MCBN) filed a lawsuit in Collier County Circuit Court Aug. 22 against three Jacksonville-based firms, Atlantic Capital Associates, Inc., Florida Capital Bank, N.A. and Allen C. Ewing & Co.

The suit alleges that Atlantic Capital, a loan originator and underwriter, along with the other two companies, caused the bank to suffer nearly $20 million in damages by creating, marketing and selling impaired mortgages between June 2006 and April 2007.

“All (mortgage lenders) were thinking about were the fees ... They wanted to just push stuff through the pipeline. Far too many people put in sludge that turned to sewage and sometimes it was toxic,” said Mark F. Raymond, a litigation attorney with Broad and Cassell Associates which is representing Marco Community Bank in the suit.

The three entities provided loans to borrowers to purchase and improve residential properties, and sell them for a profit.

The lawsuit alleges that the three mortgage companies falsified the appraisals of these properties. The borrowers and properties affected by the loans were not listed or made public with the suit.

The suit alleges that ACA, FCB and Ewing are liable for a “fraudulent scheme” selling loan pools to the bank based on falsified information including falsely inflated property values and misrepresentations about borrowers’ qualifications, including credit history.

The lenders also were negligent in inspecting properties before making the loans and ensuring that improvements were done to the properties before more loan money was disbursed, Raymond said.

Several states, larger banks and organizations such as the NAACP have filed similar suits of negligence and fraud against mortgage lenders in the past several months. Countrywide, facing lawsuits from at least six states including Florida, became a poster child for the sub prime mortgage crisis that has led to mass foreclosures and been a major drag on the U.S. economy.

While the effects of the fraudulent and faulty loans may be similar to Countrywide’s, the loans are somewhat different.

“There are some similarities, but when you say Countrywide, it’s such a broad brush,” Raymond said, adding that the similarity among the accused mortgage lenders is that they all made “reckless loans.”

The bank and attorneys also alleged that ACA guaranteed to repurchase loans that were in default, however ACA has not repurchased any of the loans experiencing losses from Macro Community Bank.

Included in the lawsuit is a segment of a letter from ACA to banks participating in the loan pools, including Marco Community Bank. The letter states: “poor decisions were being made by our (ACA) loan representatives in the Tampa/St. Petersburg area. Our representative was originating the loans and overseeing the draw inspections, creating a conflict of interest. He was paid on a commission basis and was approving marginal deals and releasing draw money in certain instances when the work did not qualify or was not done at all.”

The June 4, 2007 letter also stated that ACA was not able to fulfill its obligation to repurchase all loans in default. The letter stated that ACA does not have the money to purchase problem loans, foreclose or take title to complete the work and sell the houses.

Raymond said the three entities need to be held accountable for jeopardizing the wellbeing of the bank which, according to quarterly reports filed with the U.S. Securities and Exchange Commission, continues to report increased loan losses through the second quarter.

“All (the lenders) were thinking about were fees. That’s not what you should be thinking about when you’re lending,” Raymond added regarding the problems the lenders may have caused the bank, which he reports is otherwise “in very good financial health.”

Atlantic Capital Associates lists Michael Carter as the director and president of the company with the Florida Department of Corporations. Carter said ACA self-liquidated and is no longer in business. He said ACA is still listed as an active business because it is in the process of liquidating its remaining loans.

Carter was not able to comment on the lawsuit, a 54-page document. He said he was not aware of the filing against ACA until contacted by the Marco Eagle Friday.

Representatives of Florida Capital Bank and Allen C. Ewing & Co. did not return phone call or e-mail requests for comments on the allegations.

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