Taylor, Bean & Whitaker Shuts Down Lending Operations
Excerpt taken from Taylor Bean & Whitaker Press Release:
TAYLOR BEAN MUST CEASE ALL ORIGINATION OPERATIONS EFFECTIVE IMMEDIATETLY
“TAYLOR, BEAN & WHITAKER MORTGAGE CORP. (“TBW”) RECEIVED NOTIFICATION ON AUGUST 4, 2009 FROM THE U.S DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, FREDDIE MAC AND GINNIE MAE (THE “AGENCIES”) THAT IT WAS BEING TERMINATED AND/OR SUSPENDED AS AN APPROVED SELLER AND/OR SERVICER FOR EACH OF THOSE RESPECTIVE FEDERAL AGENCIES. TBW HAS UNSUCCESSFULLY SOUGHT TO HAVE THE TERMINATION/SUSPENSION DECISIONS OF EACH OF THOSE AGENCIES REVERSED. AS A RESULT OF THESE ACTIONS, TBW MUST CEASE ALL ORIGINATION OPERATIONS EFFECTIVE IMMEDIATELY. REGRETTABLY, TBW WILL NOT BE ABLE TO CLOSE OR FUND ANY MORTGAGE LOANS CURRENTLY PENDING IN ITS PIPELINE. TBW IS COOPERATING WITH EACH OF THE AGENCIES WITH RESPECT TO ITS SERVICING OPERATIONS AND EXPECTS TO CONTINUE TO SERVICE MORTGAGE LOANS AS IT RESTRUCTURES ITS BUSINESS IN THE WAKE OF THESE EVENTS. WE UNDERSTAND THAT THIS COULD HAVE A SIGNIFICANT IMPACT ON OUR VALUED EMPLOYEES, CUSTOMERS AND COUNTERPARTIES, AND ARE VERY DISAPPOINTED THAT A LESS DRASTIC OPTION IS UNAVAILABLE.“
The closure follows actions taken by HUD yesterday in response to TBW’s failure to submit a required annual report and to disclose “certain irregular transactions that raised concerns of fraud.” HUD also proposed to bar two members of senior management from dealings with the US Government for 18 months owing to HUD’s allegation the two submitted false information to the agency.
According to the above correspondence received by market participants, today is the last day of operations and most employees will be terminated by close of business. The precipitous nature was also noted in the communications from senior management in which it was said that all steps were taken to try to prevent the closing of the doors.
As has been a common theme in the wave of mortgage bank closures over the past 2 years, many employees when questioned this morning, had nothing to offer besides “business as usual…” Normal morning emails with rate sheets, guidelines, and turn-times for underwriting went out this morning, and many employees told us directly or indirectly they didn’t know anything about TBW closing their doors.
Perhaps an even more disturbing common theme for certain parts of the mortgage origination community is to see yet another king of the “private mortgage company” hill go out of business. In 2006, Aegis Wholesale touted their status as the largest private mortgage company in the US. More specifically, this means that non-bank/wholesale origination channels are dealt another severe blow as they are now losing the biggest player in that segment.
A closure like TBW, combined with the potential precedent set not only by HUD’s actions, but also their aggressive verbiage, adds to the already sizeable concern that the wholesale channels will continue to get pushed out of the picture in favor of the largest retail banks. Although that is likely a bleak outlook for some, giant banks like Wells Fargo “remain supportive of the wholesale channel”—at least for now.
TBW is the third largest endorsement lender ofrnFHA-insured loans and the eighth largest Ginnie Mae issuer with $24rnbillion, or 3%, of current outstanding Ginnie Mae fixed rate securities.
According to JP Morgan, Bankrnof America will take over TBW's loan servicing duties.
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