TBW Closes Its Doors

Another wrench was thrown in the wake of the sub-prime lending crisis  when Taylor, Bean & Whitaker Mortgage Corporation (TBW) shut its doors.  Incorporated in 1982 and headquartered in Ocala, Florida with offices throughout the country inclusive of Roanoke. TBW was one of the top ten wholesale lenders in the country.

The nationwide closing displaced more than 1,000 employees who received a one-day notice of the impending closure and left mortgage brokers and consumers with pending loan applications in the pipeline.  Also, mortgagors are at a loss as to where to send their mortgage payments.

TBW began to unravel when federal officials at Housing & Urban Development (HUD) noticed that Federal Housing Administration (FHA) insured loans underwritten by the company were defaulting at a significantly higher rate than those underwritten by other mortgage companies.  .

The day before TBW Chairman Lee Farkas made the decision to close, FHA suspended TBW from originating and underwriting new FHA-insured mortgages.  The Government National Mortgage Association (Ginnie Mae) also terminated TBW as an issuer in its Mortgage-Backed Securities program and terminated TBW’s ability to continue to service Ginnie Mae securities.  As a result, TBW could no longer bundle FHA loans and sell them as securities nor could they sell loans to Freddie Mac, the government-backed mortgage investor that in recent years had purchased a large share of Taylor Bean’s production.

Two days earlier, the FBI and federal agents, citing evidence of fraud, raided the headquarters of TBW.

Over the course of the last three years, the Better Business Bureau (BBB) of Central Florida has processed 227 complaints filed against TBW with 164 of those complaints having been processed within the last 12 months.  Based on BBB files, TBW was rated a D- with reasons for the rating including, “Government action(s) against business.”  The Government actions include reference to a multi-state settlement with 14 states on June 22, 2009 for exceptions going back to 2006.

HUD has indicated that for borrowers in the process of obtaining an FHA-approved loan, if the loan has already been underwritten by TBW and approved by FHA, then Bank of America will be servicing those loans.  There is a caveat, however.  Since TBW’s lending division is closed, HUD officials have indicated that it is unclear as to whether they will be able to access the status of some loans that may have been approved.  If the applications for mortgage loans and refinances are still in TBW’s pipeline, the borrower will have to find a new mortgage lender.

By Susan Ayers
[email protected]

Latest Articles

- Advertisement -

Latest Articles

- Advertisement -

Related Articles