Excerpt taken from Taylor Bean & Whitaker Press Release:

TAYLOR BEAN MUST CEASE ALL ORIGINATION OPERATIONS EFFECTIVE IMMEDIATELY

“TAYLOR, BEAN & WHITIKER MORTGAGE CORP. (“TBW”) RECEIVED NOTIFICATION ON AUGUST 4, 2009 FROM THE U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (HUD), 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 SERVICIN OPERATIONTIONS 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 COUNTERPARITES, AND ARE VERY DISAPPOINTED THAT A LESS DRASTIC OPTION IS UNAVAILABLE.”

The closure follows actions taken by HUD on August 4, 2009, in response to Taylor Bean & Whitiker’s,  TBW’s, failure to submit a required annual report and to disclose “certain irregular transactions that raised concerns of mortgage fraud.”  Mortgage fraud is one of the constituents that has lead our housing market into a slump.  HUD also proposed to bar two members of senior management from dealings with the US Government for 18 months owning to HUD’s allegation that two submitted false information to the agency.

My personal opinion is this, if TBW has been partaking in acts of mortgage fraud, they are getting what they deserve.  This will set an example to other lenders to be careful with your lending practices and be mroe transparent with your internal affairs.  Even though it isn’t the entire company that’s committing these acts, it’s the key players that should be dealt with. 

How does this affect wholesale real estate buyers?  Well most of the buyers I work with have all cash or a private source of funds.  Most wholesale properties need extensive repairs and banks won’t loan on these properties.  But this will have an impact on your business if your exit strategy is to sell to end buyers who are obtaining financing.  The best financing for the current market is through local banks.  They understand and are more in tune with the local market, therefore allowing them to lend funds to purchase properties within the area.