Buyers using FHA financing (and agents working with those buyers) may want to check where their funding is coming from, as the 3rd largest FHA wholesale lender, Taylor, Bean, & Whitaker (TBW,) was just suspended by the FHA from making new FHA loans as part of what appears to be a fraud investigation.
TBW is the 12th largest mortgage lender in the US and the 3rd largest FHA lender, and does a lot of business through wholesale channels (i.e. they a lender whose loans are originated through a mortgage broker), so anyone currently in the process of trying to get an FHA loan may be using TBW even if the pre-approval letter you have doesn’t say TBW as the lender.
It’s not clear yet exactly how loans currently in the pipeline at TBW will be affected, but if you are a borrower going through a mortgage broker to get an FHA loan and who is planning on closing soon (or if you’re an agent working w/ one of those borrowers), it’s probably safest to double-check w/the mortgage broker to make sure that you aren’t going to be impacted. (It’s also not clear whether TBW’s VA loans will also be affected; TBW is similarly one of the largest VA wholesale lenders around.)
(For our mortgage clients and the agents working with them: none of your loans were placed at TBW when this news broke, although there were a few that I was thinking about TBW as an option for; with 70+ wholesale lenders, though, I was quickly able to move those loans to other lenders. I’ve already contacted any affected borrowers and their agents, so if you weren’t contacted by me yet, your loan wasn’t affected.)
(Have you been affected by this suspension? The first thing you should do is talk to you loan officer to see if they can move you to a different lender; if they can’t help you, though, contact us and we’d be glad to help out if we can.)
Since this is breaking news, here’s a quick link to Google News so you can see if there’s any more/newer info.
Update 8/5/09: TBW officially shut down all operations today, after reportedly also being cut off from lending by Freddie Mac.
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New Mortgage Info » Blog Archive » TBW Suspended From FHA Lending « Ethical Homes
on Aug 5th, 2009
@ 3:41 pm:
[...] sweth wrote an interesting post today onTBW Suspended From FHA Lending « Ethical HomesHere’s a quick excerpt [...]
New Mortgage Info » Blog Archive » TBW Suspended From FHA Lending « Ethical Homes
on Aug 21st, 2009
@ 8:48 am:
[...] sweth wrote an interesting post today onTBW Suspended From <b>FHA</b> Lending « Ethical HomesHere’s a quick excerpt [...]
Margaret
on Sep 4th, 2009
@ 2:00 am:
I recently came across your blog and have been reading along. I thought I would leave my first comment. I don’t know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.
Margaret
Toby Donaldson
on Sep 7th, 2009
@ 1:01 pm:
Being a lender myself I found it interesting to read this story. Great post. It includes a lot of useful tips and helpful information.
Matt W
on May 3rd, 2010
@ 12:12 am:
My wife & I are currently in the process of trying to buy a property as a short sale. The first lien is held by TBW $390,000 the second BOFA $ 80,000. We have offered $330,000 & our mortgage approval is from BOFA (FHA) 97% LTV.
We felt confident based on our agents thoughts that we were close to total liens and being FHA approved by one of the lien holders.
We are now concerned due to delays and bad press about TBW.
Please advise if we should/can do anything to expedite the process.
Last we heard they were both assigning different negotiators and that TBW does not have its act together meaning further delays.
Questions:
If the bank has assigned a negotiator does this protect foreclosure from occuring (inevitably killing the deal)?
Based on outstanding liens of 470K are we close enough? The fair value (based on comps) is $350K – $400K.
Thank you for considering my questions, we look forward to your response.
Matt & Krissy.
sweth
on May 18th, 2010
@ 2:59 pm:
Matt — A bank assigning a negotiator does not necessarily suspend the foreclosure process. In terms of specifics of how close you’ll need to be on your offer vs. outstanding liens and fair market value, that’s a very complicated equation with a lot of factors that play into it. With that said, the fact that current fair market value is so far above your offer makes it less likely that the first lien holder would approve a short sale; even if the lienholder would incur $50k in costs by going through foreclosure, a $400k market value would mean that they could still make $20k more in profit by foreclosing and re-selling rather than accepting your offer. There are a lot of other factors to consider, however, many of which you wouldn’t necessarily be privy to, including the finances of the seller and whether they are currently paying their mortgage or not.
The most important thing you can do as a potential buyer of a short sale property is to make sure that the agent representing you is very familiar with short sales and knows how to determine before you even submit your offer whether it’s a feasible one. It sounds like you are already working with an agent right now, but if that isn’t the case, let us know and we’d be happy to help you find a short sale expert in your area.