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After a long track record of providing solid mortgages through its brokerage network, Taylor Bean and Whitaker close its doors after a Federal Raid. The lender Ginnie Mae also terminated their mortgage backed securities wing due to the ordeal.

With a FHA rescue out of the picture and additional financing unavailable, the companies only other option was to close its doors. Management contacted the employees conveying their disappointment and explaining that another option was unavailable. Now recognize that Taylor, Bean and Whitaker was not a tiny company. At the time of the closure, they employed almost 2,000 people.

TBW was raided by the Federal Government on August 3rd, 2009 in Ocala, Florida.

Observe that I put “raided” in quotes? This extends from a media term invoking thoughts of Al Capone being chased by Elliot Ness. But in all actuality, this search was warranted. Taylor, Bean and Whitaker had failed to submit required financial reports which raised the red flag. It was also stated that TBW failed to disclose irregular transactions, further raising the alert of Fraud.

The company incorporated in Ocala, FL back in 1982. At the time, it was just a small town mortgage firm. But through the years, it had grown into one of the largest mortgage wholesalers in the country. A wholesaler generally obtains most of their mew mortgages from retail mortgage brokerage shops.

The downfall of Taylor, Bean and Whitaker is another blow to the mortgage brokerage industry which has witnessed literally hundreds of sources of loans go belly up. As FHA mortgages become more popular as the loans become the mortgage program of choice for borrowers with lower down payments, more and more brokers are closing up shop. The process to become FHA approved is quite substantial and most brokers cannot meet the FHA requirements. Those brokers that have their FHA designation are finding themselves in the enviable position of having far fewer competitors..

What comes to the next evolution of the mortgage industry? Well, pay attention because we’re already pulling back the veil. Mortgage borrowers can choose from a Governmental Lender Service or from the remnants of the once powerful brokerage networks. But Who’s LEFT!? Only a few small Local Lenders that still portfolio their own Loans. I hope you can see that your choices are being eliminated since it becomes harder and harder each day to find a broker. Now you may choose a fixed rate - oh, you can choose 30 or 20 or even 15 years or one of a couple of adjustable programs left - 5, 7 or 10 year fixed rate products that convert to floating rates after the fixed rate portion ends. Is that what you call choice? Well that’s all that’s left! And you call this good for business.