OCALA, Fla. -- Taylor, Bean & Whitaker Mortgage said Monday it filed for bankruptcy protection after moves this month by regulators led to a virtual shutdown of what had been one of the nation's biggest independent mortgage bankers.
Taylor Bean said in a statement that its Chapter 11 filing in U.S. Bankruptcy Court in Jacksonville, Fla., will allow it to operate "on a scaled-down basis and begin the work of recovering, restricting and possibly liquidating its assets."
Recent moves triggered by the Federal Housing Administration's Aug. 3 suspension of the privately held company's authority to issue FHA-insured loans "crippled the company's business operation," Ocala, Fla.-based Taylor Bean said.
The FHA's suspension was followed by notices from government-sponsored companies Ginnie Mae and Freddie Mac suspending Taylor Bean as an issuer of mortgage-backed securities — mortgages that are bundled and sold to investors. Taylor Bean also was barred from selling and servicing mortgages, with servicing transferred to other providers.
While an appeal of the Freddie Mac termination is pending and other challenges are planned, Taylor Bean said it "has no way to continue normal business operations in the interim."
The 27-year-old company abruptly laid off about 2,000 employees nationwide on Aug. 5, the day that federal agents raided its headquarters. Authorities said the firm failed to submit a required annual financial report and misrepresented that there were no unresolved issues with its independent auditor.
Taylor Bean said it believes the regulatory moves were related to investigations into the failure of Colonial Bank, which for years had been Taylor Bean's primary bank. Taylor Bean announced on March 31 that it planned to lead an investor group in a $300 million investment in Colonial, a move intended to make Colonial eligible for $550 million in federal bailout funds. But the deal recently fell through.
Colonial froze about 100 Taylor Bean bank accounts early this month, Taylor Bean said. And on Aug. 14 federal regulators shut down Colonial Bank's parent company, Colonial BancGroup, — the biggest U.S. bank to fail this year, with about $25 billion in assets. The Alabama banking regulators who closed Montgomery, Ala.-based Colonial appointed the Federal Deposit Insurance Corp. as receiver.
Taylor Bean said it was in talks with the FDIC "so that individual borrowers are not affected further by Taylor Bean's inability to access its Colonial bank accounts."
Taylor Bean also said Monday that its business will be directed by two newly appointed independent members of its board, Bill Maloney and Bruce Layman. The new board has appointed Neil Luria of Navigant Capital Advisors as Taylor Bean's chief restructuring officer.
"This is a very complicated business, and the speed of its collapse has been stunning," Luria said.
Taylor Bean said it grew from a small mortgage broker to become one of the largest mortgage bankers in the U.S. This year, the company said it ranked as the nation's third-largest direct-endorsement lender of FHA-insured loans, and managed a combined mortgage servicing portfolio of about $80 billion.