Bank Repo Homes Contributed to Problems of Taylor Bean

The servicing of 180,000 Ginnie Mae-guaranteed home loans in the loan portfolio of Florida-based mortgage servicer and broker Taylor Bean & Whitaker has been assumed by Bank of America.

Taylor Bean filed for Chapter 11 bankruptcy in Jacksonville in the first week of August after the U.S. Housing and Urban Development started investigating its business practices and after business contracts with federal agencies were terminated.

TBW has been the country’s 12th biggest mortgage writer before it closed in the week covering August 8. It had $15.25 billion in total deposits and had 158 offices in the Tampa Bay region and operations in other states such as North Carolina. In the Tampa Bay region, TBW ranked first in the mortgage industry, having captured 20 percent of the market.

The lender was little known nationally, but it gained attention when it announced its plan of leading a bank consortium to save Colonial Bank from collapse. The deal however failed and the FDIC decided to close Colonial and sell it to BB&T.

Additionally, the North Carolina Office of the Commissioner of Banks has issued a cease and desist order against the servicer for its role in the continued rise in number of bank repo homes in the state despite its commitment not to proceed with foreclosures pending a state audit.

In the first week of August, the Federal Housing Administration told Taylor Bean to stop processing FHA home loans because of its submission of questionable loans.

Freddie Mac and Ginnie Mae soon followed, suspending the servicer’s authority to provide Ginnie – and Freddie – guaranteed loans. Because of the cancellations, Taylor Bean had to lay off around 2,000 employees.

Taylor Bean said that it will appeal the cancellations, but analysts wonder how the servicer can continue its normal operations. The following week, the Florida Office of Financial Regulation stopped the lender’s operations across the state. It specifically ordered the lender to stop foreclosure filings, stop assessing late fees and stop reporting delayed payments to credit bureaus.

In response to questions from the public, Taylor Bean issued a press release explaining that its problems may have arisen from various investigations on the collapse of Colonial Bank, which has been Taylor Bean’s primary bank for many years. The lender further explained that Colonial has frozen around 100 of Taylor Bean’s accounts and that this caused delays in the payment of borrowers’ real estate taxes and insurance premiums.

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