Closed mortgage lender Taylor, Bean & Whitaker files for Chapter 11 bankruptcy protection

Closed mortgage lender Taylor, Bean & Whitaker files for Chapter 11 bankruptcy protection
Taylor, Bean & Whitaker Mortgage said it filed for bankruptcy protection after moves this month by regulators led to a virtual shutdown of what was one of the nation's biggest independent mortgage bankers. Taylor Bean said its Chapter 11 filing in Bankruptcy Court in Jacksonville FL will let it operate "on a scaled-down basis and begin the work of recovering, restricting & possibly liquidating its assets." Recent moves triggered by the FHA suspension of the privately held company's authority to issue FHA-insured loans "crippled the company's business operation," Ocala-based Taylor Bean said. The FHA's suspension was followed by notices from gov't-sponsored companies Ginnie Mae & Freddie Mac suspending Taylor as an issuer of mortgage-backed securities -- mortgages that's bundled & sold to investors. Taylor also was barred from selling & servicing mortgages, with service transferred to other providers. While appeal of the Freddie Mac termination is pending & other challenges are planned, it said it has no way to continue normal business operations in the interim. The 27-yr-old co abruptly laid off 2,000 employees nationwide on Aug. 5, the day fed agents raided its headquarters. Authorities said it failed to submit a required annual financial report and misrepresented that there were no unresolved issues with its independent auditor. It said it believes the regulatory moves were related to investigations in the failure of Colonial Bank, which for years was Taylor Bean primary bank. It announced on March 31 it planned to lead an investor group in a $300M investment in Colonial, move intended to make Colonial eligible for $550M in fed bailout funds. But the deal recently fell thru. Colonial froze 100 Taylor Bean bank accounts early this month, it said. And on Aug. 14 fed regs shut down Colonial Bank's parent company, Colonial BancGroup -- the biggest U.S. bank to fail this year, with $25B in assets. The AL banking regulators who closed Montgomery, AL-based Colonial appointed FDIC as receiver. It said it