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Mortgage Lender's Collapse Leaves Borrowers Adrift

Taylor Bean Whitaker stops writing loans after feds raid its offices

By Truman Lewis
ConsumerAffairs.com

August 7, 2009

Freddie Mac had also reportedly suspended Taylor, Bean. The reasons for the suspensions are unclear but there have been reports that the agencies were concerned about "certain irregular transactions that raised concerns of fraud," the Wall Street Journal reported.

The Ocala, Fla., lender had been one of the largest originators of FHA loans, ranking third in the nation in June, according to industry sources. In an email to employees informing them that all but essential workers would be immediately terminated, Taylor Bean chairman Lee Farkas called it "the saddest day of my life."

The privately-held bank said that it would not be able to complete any unfinished mortgage applications, dealing a blow to thousands of home buyers and sellers as well as independent mortgage brokers and smaller banks. Taylor Bean said, however, that it expects to continue "servicing" mortgages -- collecting payments and handling other administrative tasks.

Homeowners have been complaining for months of unexpected -- and unexplained -- delays in processing new mortgage applications and modifying existing loans for consumers in financial trouble.

"I was ... told that the only way I am going to get any help is if I am staring foreclosure in the face and that I should just not make my next two mortgage payments in order to get some action from TBW," said Chris of Tallahassee, Fla., in a recent complaint to ConsumerAffairs.com. "Finally I ended up somewhere where they told me that it would take 7-10 days for them to upload my information (the information that I submitted in March!), and that it would take another 8-12 weeks for it to be reviewed!"

"This company has been a mess since day one," said Brian of Aurora, Ill., who applied for an FHA refinance through a local bank. He said that at a much-delayed closing, Taylor Bean failed to pay off the previous lender, leaving the transaction unsettled more than three months after it began.

Taylor Bean's troubles became public last week when federal agents raided its Ocala offices and the FHA confirmed it had suspended the company from making federally-insured loans and opened a fraud investigation.

The news shocked the roughly 1,000 workers in the firm's Ocala offices, who had enjoyed some of the highest-paying jobs in the small Florida community. Local news reports said workers were terminated immediately as state employment counselors rushed to meet with the traumatized workers and help them apply for unemployment benefits.

The pain extends far beyond Ocala, however. Cash-strapped borrowers may find it difficult to locate another lender offering terms as affordable as Taylor Bean's.

The collapse is likely to have a disproportionate effect on mobile home purchasers. as Taylor Bean was one of the few major lenders willing to write loans for manufactured homes. Bank of America and Wells Fargo are among the few remaining lenders writing FHA loans for mobile homes.

Small banks that relied on Taylor Bean are also left without an immediate replacement lender, likely putting a crimp in the housing market's recovery in many local communities.

Read consumer comments about Taylor Bean.

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