The state banking commissioner today ordered Taylor, Bean & Whitaker Mortgage Corp. to stop foreclosing on existing loans and originating new loans in the state.
The cease-and-desist order issued by N.C. Commissioner of Banks Joe Smith is in effect pending an audit of the Ocala, Fla. lender's loan files.
Last week Taylor Bean was suspended from participating in several federal lending programs, such as FHA and Freddie Mac, after it failed to report that an auditor had discovered "certain irregular transactions that raised concerns of fraud," according to the Federal Housing Administration.
After the federal suspension, Taylor Bean announced it was stopping new loan activity, including funding loans already in its pipeline.
Taylor Bean, which told Florida regulators last week that it had terminated nearly 1,000 workers, indicated that at least 40 borrowers in North Carolina had loans scheduled for closing last week that did not close as a result of the situation, according to state regulators. The banking commission said it is likely that other loans that were in process also are in jeopardy.
Taylor Bean works almost exclusively with mortgage brokers and therefore doesn’t have any local offices, Deputy Commissioner of Banks Mark Pearce said. But it is a big lender in the state, originating more than 6,000 loans last year and about 4,000 in 2007, according to the banking commission.
The commission is working with Taylor Bean to help connect loan applicants to other lenders. The commission suggests that Taylor Bean loan applicants contact their mortgage broker to discuss options.
In June TBW voluntarily agreed to suspend foreclosures in North Carolina, but regulators report they have evidence that the company continued foreclosure activity despite the agreement. State regulators also said they have been unsuccessfully trying to collect information from Taylor Bean regarding its compliance with lending laws since August 2008.
Although Taylor Bean said it was halting all loan activity, Pearce said it was prudent for the state to issue a cease-and-desist order “because the company may change its mind.”
Taylor Bean has the right to appeal the commissioner's order. The commissioner also has scheduling a hearing for October to determine whether to revoke Taylor Bean's license to originate and service loans in the state.
In recent years the banking commission has stepped up its oversight of mortgage companies, Pearce said.
That includes requesting data from companies about every mortgage in the state and beefing up its staff or mortgage examiners, which has more than doubled to 13 in the past two years.
The commission’s investigation staff – which deals mostly but not exclusively with mortgage companies – has increased from two to six in the past three years, Pearce said.