Yesterday FHA announced it’s suspension of Taylor, Bean and Whitaker’s FHA origination.  The action came after Taylor Bean failed to file required annual financial reports.  Although FHA will allow Taylor Bean to appeal it’s action within 30 days, the Government National Mortgage Association (GNMA) has immediately terminated Taylor Bean’s registration with it’s MBS pools. Taylor Bean has been a primary outlet for manufactured homes and HUD’s FHA 203k rehabilitation loan.

If you’re a Realtor or a borrower with a loan currently in process and you’re aware of it being underwritten by Taylor Bean please contact your loan officer immediately to seek a backup plan or to seek an alternative lender immediately.  Please note, that none of my files in process are in Taylor Bean’s pipeline.

Below is HUD’s News Release:

HUD No. 09-145 Brian Sullivan (202) 708-0685 www.hud.gov/news/

For Release Tuesday August 4, 2009

FHA SUSPENDS TAYLOR, BEAN & WHITAKER MORTGAGE CORP. AND PROPOSES TO SANCTION TWO TOP OFFICIALS
Ginnie Mae Issues Default Notice and Transfers Portfolio

WASHINGTON – The Federal Housing Administration (FHA) today suspended Taylor, Bean and Whitaker Mortgage Corporation (TBW) of Ocala, Florida, thereby preventing the Company from originating and underwriting new FHA-insured mortgages. 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. This means that, 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.

FHA and Ginnie Mae 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 HUD Secretary Shaun Donovan.

FHA Commissioner David Stevens said, “TBW failed to provide FHA with financial records that help us to protect the integrity of our insurance fund and our ability to continue a 75-year track record of promoting, preserving and protecting the American Dream. We were also troubled that the Company not only failed to disclose it was a target of a multi-state examination and a separate action by the Commonwealth of Kentucky, but then falsely certified that it had not been sanctioned by any state. FHA won’t tolerate irresponsible lending practices.”

Ginnie Mae President Joseph Murin said, “I would like to reassure TBW’s customers whose loans serve as collateral for Ginnie Mae securities that, although this action will result in a new servicer, the transition will be seamless for them.”

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. TBW is the third largest direct endorsement lender of FHA-insured loans and the eighth largest issuer of Ginnie Mae mortgage-backed securities. 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 the action FHA is announcing today.

In conjunction with TBW’s suspension, HUD sent notices of proposed debarment to TBW’s Chief Executive Officer, Paul R. Allen, and TBW’s President, Ray Bowman. Mr. 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 fiscal year ending on March 31, 2009. Mr. Bowman’s proposed debarment alleges that he submitted two false certifications to HUD on TBW’s Yearly Verification Report. Mr. Allen and Mr. Bowman have thirty days to contest the proposed debarments.

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HUD is the nation’s housing agency committed to sustaining homeownership; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development and enforces the nation’s fair housing laws.

Ginnie Mae is a wholly-owned government corporation within the U.S. Department of Housing and Urban Development. Ginnie Mae pioneered the mortgage-backed security (MBS), guaranteeing the very first security in 1971. An MBS enables a mortgage lender to aggregate and sell mortgage loans as a security to investors. Ginnie Mae securities carry the full faith and credit of the United States Government, which means that, even in difficult times, an investment in Ginnie Mae is one of the safest an investor can make.

More information about HUD and Ginnie Mae is available on the Internet at www.hud.gov, espanol.hud.gov and www.ginniemae.gov

Ok, so Taylor, Bean and Whitaker has officially announced the ceasing of all origination operations.  If you are a Realtor, please make sure you’re clients are placed somewhere else quickly.  Again, none of my loans in process are being underwritten by Taylor Bean.

If you have any questions or need help finding a suitable source for your loan or a clients loan, please don’t hesitate to contact me.

TBW Press Release:

PRESS RELEASE

TAYLOR BEAN MUST CEASE ALL ORIGINATION OPERATIONS EFFECTIVE IMMEDIATETLY

Ocala, Florida – Taylor, Bean & Whitaker Mortgage Corp. (“TBW”) received notification on August 4, 2009 from the U.S  Department of Housing and Urban Development,  Freddie Mac and Ginnie Mae (the “Agencies”) that it was being terminated and/or suspended as an approved seller and/or servicer for each of those respective federal agencies.  TBW has unsuccessfully sought to have the termination/suspension decisions of each of those agencies reversed.    As a result of these actions, TBW must cease all origination operations effective immediately.  Regrettably, TBW will not be able to close or fund any mortgage loans currently pending in its pipeline. TBW is cooperating with each of the Agencies with respect to its servicing operations and expects to continue to service mortgage loans as it restructures its business in the wake of these events.  We understand that this could have a significant impact on our valued employees, customers and counterparties, and are very disappointed that a less drastic option is unavailable.

FHA lenders are beginning to implement some new guideline overlays.  Watch the video and be prepared to coach your clients accordingly:

Dealing with life after Taylor, Bean and Whitaker… Be prepared to time your closings accordingly.  The closure of the nation’s largest FHA lender has had an effect on the entire wholesale mortgage market.  Check out the video below:

Today I had an email from a family member asking for some advice on how to correct an error on a credit report.  There are several reasons why a credit report may show inaccurate or misrepresented information and it’s important to know how to take the steps to contact the credit reporting agencies (Experian, Equifax and Trans Union).  All three are separate entities and each has a separate matrix to rate our credit/spending patterns.  Each have a range for our FICO scores from 400-850 (approximately).

Most creditors, banks and collection agencies will report to each agency on a monthly basis.  If you are aware of inaccurate information on your credit report it’s a good idea to make sure which agency is reporting the information.  Often times only one or two of the agencies will report inaccurate information.  In the case of my family member there was some very poor communication on the part of the creditor and I thought it’d be a good idea to post some helpful steps to disputing this information.

1. Access your free credit report – Often times you may become aware of an error or inaccurate information on only one agency.  If you have a credit report given to you by a bank or credit company they will likely only provide a report from a single agency (most likely Equifax) in order to reduce the cost of pulling three credit reports.  If you’re applying for a mortgage you’ll be provided with a tri-merge credit report which combines information from all three agencies.  Go to www.annualcreditreport.com and download your free credit report from each credit reporting agency.  You will need create a log-in and provide some information to receive the credit reports.  The free credit report will show you information reporting from each agency, however, you will not be provided a score.  For the purposes of challenging an error, it’s not necessary to have a score, but if you insist on having a score you can choose to pay for the score through this website.    It is very important to go to this website as there are hundreds of websites that want you to pay for the report which should be free (i.e. freecreditreport.com).
2. Identify the agency or agencies reporting the error – Print the report from each agency.  Identify the error or inaccurate infomration on each report.
3. Document the error – It’s important to document your case for the inaccurate information or error.  You will want to provide detailed information about why the information is inaccurate or an error.
4. Dispute the information with the appropriate agency – Each credit reporting agency has a website with detailed information on how to dispute these errors.  Visit the website and proceed accordingly.  Click to visit each agency’s official dispute page: Equifax / Experian / Trans Union. It is very important for you to remember your log-in information so you can follow up.
5. Check the result(s) of the dispute – Most disputes take 30-45 days for a response from the agency.  Check back with the agency’s website and view the result.
6. Contact me if you have any questions – seriously, I’m here to help – Much if this information can be overwhelming at times.  Give me a call or shoot me an email and I’ll answer any questions you may have.

Good luck!

November 30th (the expiration of the first time homebuyer tax credit) is just around the corner.  Make sure your buyers are making an offer leaving sufficient time to close.  Oh yeah, and these fabulous rates…they won’t be around forever!