Why the Failure of Taylor Bean and Whitaker Matters
Posted On: August 9th, 2009 by James Posted In: Mortgage Programs • Mortgage Rates
This past week we saw the shut down of Florida based mortgage lender Taylor Bean & Whitaker. They are (were) a HUGE wholesale mortgage company that is a very common funding source for mortgage brokers. I believe they were the third largest wholesale FHA loan source in America. I am very thankful that I did not have any loans in the TBW pipeline prior to their closure, because if I had, those files would have to go to a new bank and start the process over, under newer slower rules. Not to mention that pricing has gotten worse recently. My heart goes out to all borrowers and brokers in this position, its a tough one.
T.B.&W. were shut down by the FHA. They apparently failed to disclose that their audit results were poor. I think some in the industry were particularly struck by how forcefully the FHA acted in this situation. I’m sure many in the company thought that they would be given time to rectify the problems they had, but they got an immediate cease and desist. This should be seen as yet another blow to the wholesale/broker lending model.
The FHA and the powers that be, are systematically shepherding all mortgage activity into the channels controlled by the fewer and bigger banks. The government thinks it is acting as a champion of the consumer with these actions, but I can assure you that the results of this will end in fewer choices, higher prices, and slower processing for all mortgages.
Here at Mortgage Trust, we are able to avoid many of the difficulties cropping up around the “broker model”. We operate mainly as a correspondent bank. We make our own risk decisions, and lend our own funds in most cases. But the dwindling of choices isn’t good for any of us.
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