DOW JONES NEWSWIRES
Taylor, Bean & Whitaker Mortgage Corp. announced it has
filed for Chapter 11 bankruptcy protection, the move coming three
weeks after a chain of events "crippled the company's business
operation."
The death spiral began after the Federal Housing Administration
suspended Taylor Bean's authority to issue FHA-insured loans. That
was immediately followed by notices from Ginnie Mae and Freddie Mac
(FRE) suspending Taylor Bean as an issuer of mortgage-backed
securities and a mortgage servicer.
Taylor Bean was one of the largest independent home-loan
providers before it closed down its mortgage-lending operation
Wednesday in the wake of the FHA move. Among originators of FHA
mortgages, Taylor Bean was the third-largest, and it was the
nation's 12th-largest home-mortgage lender overall, according to
Inside Mortgage Finance, a trade publication.
The company was forced to lay off some 2,000 workers and Taylor
Bean said Monday it "has no way to continue normal business
operations" as it appeals the actions by the FHA, Ginnie Mae and
Freddie Mac. While under bankruptcy protection, it will work to
recover, restructure and possibly liquidate its assets.
Taylor Bean put the blame for the events on the investigations
surrounding the failure of Colonial Bank, which for years was
Taylor Bean's primary bank. But it froze nearly 100 Taylor Bean
bank accounts in the days after the federal suspensions on Taylor
Bean. "This action created myriad problems in processing borrower
payments and making payments on their behalf - such as homeowner's
insurance premiums and real estate taxes," the company said
Monday.
Taylor Bean added that it is in discussions with the Colonial's
receiver, the Federal Deposit Insurance Corp., to end the
freeze.
Colonial BancGroup Inc. was closed Aug. 14 by regulators after
an agreement was reached to have BB&T Corp. (BBT) acquire most
of its assets and all of its deposits. The move capped weeks of
speculation about the fate of the bank, which had been struggling
amid growing losses on real estate and construction loans and was
facing a federal criminal probe. Colonial's failure marks the fifth
largest U.S. bank failure ever.
"This is a very complicated business, and the speed of its
collapse has been stunning," said Neil Luria, Taylor Bean's new
chief restructuring officer. "We are very appreciative of the
efforts of the members of management and other company employees,
along with a large team of professionals, who have worked
tirelessly under very stressful circumstances to make today's
filing possible. Much remains to be done, but we are committed to
creating and realizing the value of the company's assets."
-By Kevin Kingsbury, Dow Jones Newswires; 212-416-2354;
kevin.kingsbury@dowjones.com