The stunningly quick collapse of mortgage lender Taylor, Bean & Whittaker is over, with the only logical and possible conclusion: bankruptcy. The Florida mortgage lender, which in the January - June period was the 12th largest mortgage lender filed for bankruptcy in Middle District of Florida (case 09-07047). Neil Luria of Navigant, who was named as CRO, had this to say: "This is a very complicated business, and the speed of its collapse has been stunning. Much remains to be done, but we are committed to creating and realizing the value of the company’s assets."
Taylor Bean recently hit the news, after it lead an investor group that was ready to pay $300 million for failed bank Colonial, a lender, which was subsequently acquired by BB&T. The company, which had underwritten $17 billion of mortgages in the first six months of the year according to Inside Mortgage Finance, and $30 billion in all of 2008, was subsequently suspended by the FHA, has been in talks to get access to about 100 accounts frozen by Colonial. At this point the company may have other, more pressing concerns.
According to the filed Cash Management Motion, TBW employed approximately 2,500 people across the country and employees another 1,500 people in various subsidiaries. The company's primary business involves:
- Origination, underwriting, processing and funding of conforming conventional and government-insured residential mortgage loans
- Sales of mortgage loans into the "secondary market" to government-sponsored enterprises such as Freddie Mac and Ginnie Mae
- Mortgage payment processing and loan servicing.
Now it can also add Liquidation. What is probably most concerning is that according to the same disclosure, at June 30, TBW serviced 488,000 mortgage loans having aggregate unpaid balances of $80 billion. Looks like some more fun for Freddie and Ginnie as they juggle the fall out from this, as TBW borrowers somehow get the impression that since their mortgage lender is bankrupt they never have to pay their mortgage again.
The primary reason for TBW's bankruptcy was given as the termination by Ginnie and Freddie to sell and service their respective $26 billion and $51.2 billion loan portfolios. That and some other disclosures about shady dealings with Colonial: "Historically, TBW and Colonial have had an extensive banking relationship. Colonial maintained virtually all of TBW's bank accounts, including approximately 108 custodial accounts necessary to TBW's servicing business. Significantly, Colonial was party to participation facility agreements with a cumulative purchasing capacity in excess of $3 billion, along with a $20 million line of credit, all of which were critical to TBW's business operations." Alas the relationship ended thusly: "Beginning on or about August 5, 2009, Colonial froze all of TBW's accounts and refused to accept deposits, honor checks, receive wire transfers, or permit disbursements." One wonders how much the other 81 bank failures YTD have impacted existing bank-mortgage lender relationships. If one listens to the news, likely none at all... until it is of course impossible to hide these.