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Bankrupt Taylor Bean Plans Appeal

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Taylor, Bean and Whitaker Mortgage Corp. has filed for bankruptcy protection and hired a restructuring team. The company said it still hopes to appeal its suspension by the U.S. Department of Housing and Urban Development and the Government National Mortgage Association.

An announcement today from the Ocala, Fla.-based lender indicated it has filed for relief under Chapter 11 of the U.S. Bankruptcy Code in U.S. Bankruptcy Court in Jacksonville, Fla.

Taylor Bean explained that its Aug. 3 suspension by the Federal Housing Administration was immediately followed by its suspension as a seller, servicer and issuer of mortgage-backed securities by Ginnie Mae and Freddie Mac.

“Taylor Bean appealed the Freddie Mac termination and intends to appeal the HUD and Ginnie Mae terminations later this month, but has no way to continue normal business operations in the interim,” the statement said.

The company went on to say that its demise was tied to investigations surrounding the Aug. 14 failure of Colonial Bank. The Montgomery, Ala.-based institution, which had been Taylor Bean’s primary bank for “years,” froze 100 of its bank accounts on Aug. 6. Taylor Bean said it is negotiations with the Federal Deposit Insurance Corporation to release the freeze on the accounts.

As it was dealing with the suspensions and inability to access its bank accounts, it also faced cease-and-desist orders from numerous states.

“Taylor Bean has been in ongoing discussions with these regulators since early August and hopes that these can be resolved in the near future,” the statement said. “Taylor Bean will operate on a scaled-down basis and begin the work of recovering, restructuring and possibly liquidating its assets.”

Two new directors, Bill Maloney and Bruce Layman, will direct the business. Both reportedly have “extensive experience” restructuring distressed businesses. In addition, Neil Luria of Navigant Capital Advisors was appointed chief restructuring officer.

Luria noted in today’s news release that the speed of Taylor Bean’s collapse has been “stunning” and lauded efforts by “members of management and other company employees, along with a large team of professionals, who have worked tirelessly under very stressful circumstances to make today’s filing possible.”

The beleaguered lender was founded in 1982 as a mortgage broker and grew to become a “top 10 national wholesale mortgage lender” and “the country’s third largest direct-endorsement lender of FHA-insured loans,” according to data reported by the company.

Taylor Bean reports $30 billion in annual originations. Prior to its demise, its servicing portfolio reportedly reached $80 billion and headcount was more than 2,000.

Taylor Bean was the lead investor in a $300 million bid to acquire Colonial Bank parent Colonial BancGroup Inc. But that deal fell apart in July.

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