Taylor, Bean and Whitaker Mortgage Corp, the 12th-largest U.S. mortgage lender, has shut down its mortgage lending operations after the Federal Housing Administration barred it from making loans that the agency insures.
The closure came a day after the FHA punished the Ocala, Fla.-based lender for having failed to submit a required annual financial report and "misrepresented" that there were no unresolved issues with an auditor that had in fact discovered "irregular transactions that raised concerns of fraud."
In an e-mail posted on the Ocala Star-Banner newspaper’s Web site, closely held Taylor Bean said it must cease all mortgage lending immediately, and will not close or fund any pending home loans.
It said it expects to continue servicing mortgage loans "as it restructures its business in the wake of the events."
Taylor Bean also revealed that it can no longer sell loans to Freddie Mac, the mortgage financier, after it was earlier cut off by Government National Mortgage Association, better known as Ginnie Mae.
The Wall Street Journal said Chairman Lee Farkas, in an e-mail to staff, said: "Today will be the last day of operations for TB&W. I have done everything possible to try to save it, but I couldn’t." He also said all except "essential" employees will be "terminated today," the newspaper said.
The company, Farkas and spokeswoman Melissa Spata did not return several phone and e-mail requests for comment.
Taylor Bean made $17 billion of mortgage loans from January to June, according to the newsletter Inside Mortgage Finance.
It is one of the largest U.S. home loan providers not owned by a large bank.
The company had been offering $300 million to help keep the troubled Montgomery, Ala.-based lender Colonial BancGroup Inc. afloat, but Colonial last week said that agreement had fallen apart.
Earlier this week, federal agents associated with the special inspector general for the government’s Troubled Asset Relief Program searched a Colonial office in Orlando, Fla. The Ocala Star-Banner reported a separate search at Taylor Bean’s office in Ocala.
The $300 million Taylor Bean investment could have helped Colonial obtain $550 million in federal aid from TARP.
