August 24, 2009

Mortgage firm Taylor Bean files Chapter 11

U.S. mortgage lender Taylor, Bean & Whitaker announced Monday it was filing for Chapter 11 bankruptcy protection as it faces federal suspensions.

The move came less than a week after the one-time 12th-largest mortgage lender in the United States lost its authority to issue loans insured by the Federal Housing Administration and was suspended by Ginnie Mae and Freddie Mac as an issuer of mortgage-backed securities and a mortgage servicer, The Wall Street Journal reported.

A statement released by Taylor Bean indicated the company would lay off some 2,000 workers, claiming it has no way to continue normal business operations while it seeks to have the FHA, Ginnie Mae and Freddie Mac actions overturned upon appeal.

The Journal said the Ocala, Fla., mortgage company is blaming its insolvent bank, Colonial Bank, for freezing its accounts in the wake of the suspensions. Colonial Bank was seized this month by the Federal Deposit Insurance Corp.

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 Taylor Bean said in its statement.