Sovereign Bank of Philadelphia could be facing losses on a $50 million loan it made to Taylor, Bean & Whitaker Mortgage Corp. that was collateralized by that now-defunct home lender's servicing rights.
The Government National Mortgage Association, known as Ginnie Mae, seized the rights shortly before Taylor Bean, of Ocala, Fla., went bankrupt last month.
Last week the situation was stirring talk in mortgage investment banking circles, because there is a fear that Ginnie is not respecting Sovereign's lien on the servicing portfolio. "Fannie [Mae] and Freddie [Mac] have what's called an 'acknowledgement agreement' that says it will recognize a first lien on servicing rights as long as it's a qualified lender providing financing," a servicing broker said. Ginnie has a similar document, "but it's not that airtight on the lien, and that's what causing concern," the broker said. The broker, who requested anonymity, said Ginnie's position on the Sovereign loan "is a significant blow to any bank that might make a loan collateralized by Ginnie Mae servicing."
Neither Sovereign, a unit of Banco Santander SA of Madrid, nor Ginnie would discuss the matter. Sovereign is not listed as an unsecured creditor in Taylor Bean's bankruptcy filing, which could mean it is assuming the lien has collateral behind it.
Taylor Bean went bust after it lost the authority to originate and service loans for Ginnie, Freddie or the Federal Housing Administration. The Department of Housing and Urban Development, which oversees the FHA and Ginnie, said Taylor Bean had misled the agencies about its standing with auditors and state regulators. Ginnie transferred the job of servicing about $25 billion of loans from Taylor Bean to Bank of America Corp., the agency's master subservicer.