FHA Suspends Taylor, Bean And Whitaker

Posted by Orb Staff on August 05, 2009 No Comments
Categories : Residential Mortgage

deral Housing Administration (FHA) has [link=http://www.hud.gov/news/release.cfm?content=pr09-145.cfm/][u]suspended[/u][/link] Ocala, Fla.-based Taylor, Bean and Whitaker Mortgage Corp. (TBW) from originating and underwriting new FHA-insured mortgages – a move that comes days after federal agents searched TBW's offices. The Government National Mortgage Association (Ginnie Mae) is also defaulting and terminating TBW as an issuer in its mortgage-backed securities (MBS) program and is ending TBW's ability to continue to service Ginnie Mae securities. Effective immediately, TBW will not be able to issue Ginnie Mae securities, and Ginnie Mae will take control of TBW's nearly $25 billion Ginnie Mae portfolio. TBW is the third-largest direct-endorsement lender of FHA-insured loans and the eighth-largest issuer of Ginnie Mae mortgage-backed securities. FHA and Ginnie Mae say they are imposing these actions because TBW failed to submit a required annual financial report and misrepresented that there were no unresolved issues with its independent auditor, even though the auditor ceased its financial examination after discovering certain irregular transactions that raised concerns of fraud. FHA's suspension is also based on TBW's failure to disclose, and its false certifications concealing, that it was the subject of two examinations into its business practices in the past year. ‘Today, we suspend one company, but there is a very clear message that should be heard throughout the FHA lending world: Operate within our standards, or we won't do business with you,’ said Housing and Urban Development Secretary Shaun Donovan in a media statement. FHA Commissioner David Stevens said the agency was troubled by TBW's false certification that it had not been sanctioned by any state. In late June, TBW reached an [link=http://www.mortgageorb.com/e107_plugins/content/content.php?content.3746][u]agreement[/u][/link] with 14 state regulators in connection with the regulators' investigation into the company's underwriting standards and risk management policies regarding nontraditional loan products. TBW shelled out $9 million to the states as part of the settlement. The company was also a target of a separate action by the commonwealth of Kentucky. "FHA won't tolerate irresponsible lending practices,’ Stevens said. TBW's immediate suspension is for a temporary period, pending the completion of an investigation by HUD's Office of Inspector General, an ongoing review by the department's Office of Housing, and any legal proceedings that may ensue. FHA decided that TBW's immediate suspension is in the best interest of the public and is necessary to protect the financial interests of the department. TBW may appeal its immediate suspension by submitting a written request for a hearing before an administrative law judge within 30 days. Such a request will not delay FHA's actions. In conjunction with TBW's suspension, HUD sent notices of proposed debarment to TBW CEO Paul R. Allen and President Ray Bowman. Allen's proposed debarment alleges that he submitted false and/or misleading information to Ginnie Mae regarding TBW's delay in submitting its audited financial reports for the fiscal year ending March 31. Bowman's proposed debarment alleges that he submitted two false certifications to HUD on TBW's Yearly Verification Report. On Tuesday, Fitch Ratings placed TBW's residential servicer ratings on Rating Watch Negative, citing concerns over the ongoing federal investigations. SOURCES: [link=http://www.fha.gov]FHA[/link], [link=http://www.fitchratings.com]Fitch Ratings

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