By: Robin Ford Wallace, Staff Reporter

The Sentinel contacted Farm Credit Services in Louisville, Ky., for comment on the Southern Group’s investment arrangement as described in the accompanying story. David Lynn, senior vice president, Financial Services, on Tuesday replied by email as follows, in part:

“Any practice by a developer or seller to circumvent the required down payment via refunding these funds back to the borrower is (in) violation of our loan terms. Furthermore this act would be a distortion of the loan closing information as detailed on the settlement statements obtained for each loan closing.

 “Additionally, the practice of the developer making monthly payments to FCS on behalf of the borrower is a practice which Farm Credit Services was fully unaware (of) at inception and only became aware of this action in recent months. Farm Credit

Services ceased all lending within ‘The Preserve’ during the 4th quarter, 2008.”

The Southern Group’s Travis Shields, contacted for response, said Southern had done its business with Jerry Bowlin at Farm Credit’s Dandridge, Tenn., branch. “We have proof that they were not only aware, that they were excited that we had come up with this program and that they had approved it,” he said. “We have many correspondences from Mr. Bowlin acknowledging that he received our letters, and him in essence cheering us on.”

The Sentinel also contacted Cornerstone Bank in Chattanooga. Cornerstone’s April Goodin said the bank did not wish to comment at this time.