Major Mortgage Bank Taylor Bean Folds Up

This is a bit bizarre and there’s probably a lot more to it than appears on the surface.

The WSJ is reporting that Taylor, Bean & Whitaker, the 12ht largest mortgage company in the US, has announced that it is immediately terminating its mortgage lending business.

Taylor, Bean & Whitaker Mortgage Corp. announced that it has closed down its mortgage-lending operations.

The privately owned Ocala, Fla.-based mortgage bank cited Tuesday’s move by the Federal Housing Administration barring it from making loans insured by the FHA. It also disclosed that it can no longer sell loans to Freddie Mac, the government-backed mortgage investor that has purchased a large share of Taylor Bean’s production in recent years.

The Department of Housing and Urban Development, which oversees the FHA, said it took action against Taylor Bean because the company failed to submit a required annual financial report and to disclose “certain irregular transactions that raised concerns of fraud.”

Taylor Bean was the nation’s 12th-largest home-mortgage lender in this year’s first half, according to Inside Mortgage Finance, a trade publication. Taylor Bean did most of its lending through brokers and smaller mortgage banks and was one of the last big mortgage originators that isn’t part of a giant commercial banking company.

Its closing is a blow to hundreds of brokers and small mortgage banks that sold their loans to Taylor Bean and now will have to scramble to find new partners.

As detailed in an earlier WSJ article, Taylor, Bean’s offices along with those of Colonial BancGroup were raided on Monday by federal officials. Colonial is a troubled bank that a group of investors led by Taylor, Bean had been trying to recapitalize in order to secure TARP funds for Colonial. That effort fell apart on Friday when Colonial released dismal Q2 results.

Colonial is one of the few warehouse lenders that still lend aggressively to smaller mortgage companies and Taylor, Bean was one of their biggest customers. Taylor, Bean in turn acted as a buyer of mortgage loans originated by smaller mortgage bankers and brokers. The collapse of the chain means that a lot of buyers are going to be scrambling to replace loan commitments that aren’t going to fund through Taylor, Bean.

This is pure speculation but the feds have been bringing more actions against mortgage companies and others in the real estate sector that were involved in fraudulent transactions during the bubble. It is possible that some mortgage fraud, possibly of significant size, has been uncovered that involves Taylor, Bean and Colonial. If that’s the case then it could work back down the line to the smaller mortgage outfits that were selling to Taylor, Bean.

If all of that works out to be somewhat the case, then you could see a lot of individuals and companies pulled into the whirlpool. The FBI may be late to the party but they’re pretty good at getting perps to rat out others in order to save some of their own skin. It could get interesting.

About Tom Lindmark 401 Articles

I’m not sure that credentials mean much when it comes to writing about things but people seem to want to see them, so briefly here are mine. I have an undergraduate degree in economics from an undistinguished Midwestern university and masters in international business from an equally undistinguished Southwestern University. I spent a number of years working for large banks lending to lots of different industries. For the past few years, I’ve been engaged in real estate finance – primarily for commercial projects. Like a lot of other finance guys, I’m looking for a job at this point in time.

Given all of that, I suggest that you take what I write with the appropriate grain of salt. I try and figure out what’s behind the news but suspect that I’m often delusional. Nevertheless, I keep throwing things out there and occasionally it sticks. I do read the comments that readers leave and to the extent I can reply to them. I also reply to all emails so feel free to contact me if you want to discuss something at more length. Oh, I also have a very thick skin, so if you disagree feel free to say so.

Enjoy what I write and let me know when I’m off base – I probably won’t agree with you but don’t be shy.

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3 Comments on Major Mortgage Bank Taylor Bean Folds Up

  1. You’ve absolutely on the right path that there is more to this story then meets the eye. They’ve left a trail of bodies that could tell many wonderful stories of what Lee got the company employees involved with especially during the past 8 years… His company offered much higher salaries and state of the art technology so employees put up with it or moved to greener pastures outside of Ocala.

    Signed
    ex-TBW

    • I agree they are on the right track, but certainly not “what Lee got the employees involved with”. Let’s really point the finger where the finger belongs. All of this “Fraud” talk, was not at the hands of TBW. The fraudulent transactions during the bubble was brought on by 3rd parties: Brokers and Borrowers. Anyone that knows anything would know that every borrower in a mortgage transaction signs a FINAL application at closing in front of an attorney or closing agent. Why were thousands and thousand of borrowers signing documents sworn to be “true and correct” that clearly had overstated income and other fraudulent information.
      I’m sure this is only a trickle down effect. First the lenders. Next will be the originators and finally where most of the true fraud stemmed from: the borrowers who lied about their income in order to qualify for a loan they otherwised would not have qualified for. The same people that are now whinning the need a loan modification because they can’t afford their payments.
      I say,the FBI should (and hopefully eventually will) be prosecuting each and every borrower that signed a final application with false information.

  2. Banking details in this day of technology is something cannot be manipulated and changed to suit the company as it’s easy to detect what is forged so if the company is not handing their financial records then something bad has happened and are ashamed to show. This is not a good sign as it shows bad confidence in the finance company and what they have been up to.

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