Taylor, Bean & Whitaker Mortgage Corp. said Monday that it has filed for Chapter 11 bankruptcy protection, three weeks after a chain of events "crippled the company's business operation."
The death spiral began after the Federal Housing Administration suspended Taylor Bean's authority to issue government-insured loans. That was immediately followed by notices from Government National Mortgage Association Mae and Freddie Mac suspending Taylor Bean as an issuer of mortgage-backed securities and a loan servicer.
The company was forced to lay off some 2,000 workers, and it said Monday that it "has no way to continue normal business operations" as it appeals the actions by the FHA, Ginnie Mae and Freddie Mac.
Taylor Bean put the blame for the events on the investigations surrounding the failure of Colonial Bank, which for years was Taylor Bean's primary bank. It froze nearly 100 Taylor Bean bank accounts in the days after the federal suspensions on Taylor Bean. "This action created myriad problems in processing borrower payments and making payments on their behalf — such as homeowner's insurance premiums and real estate taxes," the company said Monday.
Taylor Bean said that it is in discussions with the Colonial's receiver, the Federal Deposit Insurance Corp., to end the freeze.