Taylor, Bean, & Whitaker - What About the Appraisers?

UPDATE: Scroll to bottom for More TBW and Security One stories.

MORE UPDATES below!

Earlier today the Wall Street Journal and dozens of other sources reported that the Federal Housing Administration suspended Taylor, Bean & Whitaker Mortgage Corp. from making loans insured by the federal agency. Yesterday, August 4th, 2009, HUD issued a press release announcing the suspension. HUD states:

The Federal Housing Administration (FHA) today suspended Taylor, Bean and Whitaker Mortgage Corporation (TBW) of Ocala, Florida, thereby preventing the Company from originating and underwriting new FHA-insured mortgages. The Government National Mortgage Association (Ginnie Mae) is also defaulting and terminating TBW as an issuer in its Mortgage-Backed Securities (MBS) program and is ending TBW's ability to continue to service Ginnie Mae securities. This means that, effective immediately, TBW will not be able to issue Ginnie Mae securities, and Ginnie Mae will take control of TBW's nearly $25 billion Ginnie Mae portfolio.

FHA and Ginnie Mae are imposing these actions because TBW failed to submit a required annual financial report and misrepresented that there were no unresolved issues with its independent auditor even though the auditor ceased its financial examination after discovering certain irregular transactions that raised concerns of fraud. FHA's suspension is also based on TBW's failure to disclose, and its false certifications concealing, that it was the subject of two examinations into its business practices in the past year.


The release continues with:

FHA Commissioner David Stevens said, "TBW failed to provide FHA with
financial records that help us to protect the integrity of our insurance fund and our ability to continue a 75-year track record of promoting, preserving and protecting the American Dream. We were also troubled that the Company not only failed to disclose it was a target of a multi-state examination and a separate action by the Commonwealth of Kentucky, but then falsely certified that it had not been sanctioned by any state. FHA won't tolerate irresponsible lending practices."

Taylor, Bean, & Whitaker followed up with their own press release:

TAYLOR BEAN MUST CEASE ALL ORIGINATION OPERATIONS EFFECTIVE IMMEDIATELY

OCALA, FLORIDA – TAYLOR, BEAN & WHITAKER MORTGAGE CORP. (“TBW”) RECEIVED NOTIFICATION ON AUGUST 4, 2009 FROM THE U.S DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, FREDDIE MAC AND GINNIE MAE (THE “AGENCIES”) THAT IT WAS BEING TERMINATED AND/OR SUSPENDED AS AN APPROVED SELLER AND/OR SERVICER FOR EACH OF THOSE RESPECTIVE FEDERAL AGENCIES. TBW HAS UNSUCCESSFULLY SOUGHT TO HAVE THE TERMINATION/SUSPENSION DECISIONS OF EACH OF THOSE AGENCIES REVERSED. AS A RESULT OF THESE ACTIONS, TBW MUST CEASE ALL ORIGINATION OPERATIONS EFFECTIVE IMMEDIATELY.

REGRETTABLY, TBW WILL NOT BE ABLE TO CLOSE OR FUND ANY MORTGAGE LOANS CURRENTLY PENDING IN ITS PIPELINE. TBW IS COOPERATING WITH EACH OF THE AGENCIES WITH RESPECT TO ITS SERVICING OPERATIONS AND EXPECTS TO CONTINUE TO SERVICE MORTGAGE LOANS AS IT RESTRUCTURES ITS BUSINESS IN THE WAKE OF THESE EVENTS. WE UNDERSTAND THAT THIS COULD HAVE A SIGNIFICANT IMPACT ON OUR VALUED EMPLOYEES, CUSTOMERS AND COUNTERPARTIES, AND ARE VERY DISAPPOINTED THAT A LESS DRASTIC OPTION IS UNAVAILABLE.

Taylor, Bean, & Whitaker is based in Ocala, Florida. That's in Marion County, the north central part of the state. According to the Ocala Star-Banner, Marion County's unemployment rate already stands at 12.6 percent. It's not clear how many employees would lose their jobs. However, a special jobs center is being organized to help workers who lose their jobs. This is aimed at employees of Maslow, Security One Valuation Services (SECURITY ERROR at Security One site-no pun intended), Citrus Land Title and Taylor Bean & Whitaker.

This is certainly a sad day for Ocala, Marion County and all the folks employed by Taylor, Bean, & Whitaker. Let's not forget the appraisers affected by this turn of events.

With the knowledge the Home Valuation Code of Conduct would soon be controlling the selection and retention of real estate appraisers, Taylor, Bean, & Whitaker, along with Florida Appraiser Todd Barfield, created their very own Appraisal Management Company (AMC)March 10, 2009. That Company, Security One Valuation Services.

Here are excerpts from Security One's filings with the Florida Division of Corporations showing the names of Managing Members

(click to enlarge)

Thousands of appraisers were solicited to join this new AMC early this year, yours truly among them. Although not a fan of AMC work, I took a look at their site and contemplated submitting my name. Before filling the application, however, I had a FLASHBACK and thought better of getting back on the treadmill. It looks like it was a good decision.

Late this afternoon, a good friend and State-Certified Appraiser here in Pinellas County called in a semi-panic. He has over 15 invoices, totalling over $5,000.00, unpaid by Security One.

Another appraiser from Massachusetts posts "I had two assignments in July, refi and they have not been funded. Sent an email to TBW’s AMC asking if their doors are closed also, no response yet."

From Virginia, an appraiser says "I also did my very first AMC appraisal assignment for full fee through their AMC SecurityOne in July. I only accepted one assignment and told them that I wouldn't accept additional assignments until I got paid for the first one. I emailed them today about payment and have not heard anything yet. This is a good lesson learned. I only have myself to blame for not following my motto of never doing work for AMCs!!!"

An appraiser in Nevada posts "I did my 1 and only assignment for them last week. Oh well, glad it happened before they sent over more work I won't get paid for."

From Nevada another appraiser says "Taylor, Bean and Whittaker has taken me for 2 invoices along with 2 other appraisers that I know. Seems XXXXX (not verified), will be taking them over. How are appraisers to get paid when the HVCC commands that we trust a 3rd. party with our money? Before HVCC we collected at the door now we have to put trust in companies via e-mail that may be here today and gone tomorrow. Is there a better way?

The Taylor, Bean, & Whitaker story is a sad one. However, the more serious story involves the countless appraisers interested in providing appraisal services for mortgage loans that are forced by the Home Valuation Code of Conduct to extend credit to companies tied to, or owned by large, shaky (and maybe shady) mortgage lenders. Companies that are unregulated by all but a few states. Companies that, as the mounting evidence demonstrates, are guilty of the same kind of pressure on appraisers the HVCC was designed to eliminate.

It seems that only appraisers are being eliminated. What a system.

They meant for the acronym HVCC to be pronounced "havoc" right?

UPDATE: More TBW and Security One stories.

An Appraiser from Virginia posts "I just got a call from an loan officer from Virginia. She wanted to know if I got paid for the appraisal I did in July as her client did pay for the appraisal fee up front. I told her no. She said she's going to make sure that I was paid, asked if I had a contact name and number for Taylor Bean & Whitaker which I gave her. She was so angry and was going on and on about her 25 loans in the pipeline and her having lost over $25,000 in commission because of TBW, about the out of state appraisers having done poor quality appraisals and having to pay for 2 appraisals in most cases for one property, having to wait sometimes over a month for an appraisal to be completed etc.

No wonder so many are angry. It seems that everyone is losing money with the implementation of the HVCC. Everyone except the AMCs.I haven't received any replies to my emails and phone calls and I don't think I will"

An appraiser from Jacksonville, FL emails " I am presenting my bills for appraisals for Taylor Bean and Whitaker to Andrew Cuomo for payment." He also adds this http://us.mc531.mail.yahoo.com/mc/compose?to=andrew.cuomo@attorney.general.gov , and the suggestion that others contact the fella in New York and send your invoices too.

A distressed (and angry) appraiser posted "Just left a message w/AG Cuomo's HVCC hotline asking if they will be paying the TB&W appraisal bill, since we were not allowed to collect the appraisal fee upfront I assume AG Cuomo will pay for it....will keep you posted. OH by the way...the is office number is 1-800-771-7755 hit "0" for the operator and ask for the HVCC hotline..then leave a message."

Another appraiser: "I am currently on hold. I tried to call Security One about whether or not I would get paid for my appraisal work. I didn't get Security One, I got the Taylor Bean switchboard. I thought these AMC's were supposed to be separate entities which were impartial? What a joke. I guess TB&W ran out of money and couldn't pay their Congressman anymore for protection."

And now, something different from MortgageNewsDaily:

Another concern regarding the closing of Taylor Bean is with the appraisals that were performed. Under the HVCC guidelines, you are supposed to be able to transfer appraisals from one lender to another, seems simple but most lenders have conditions. The appraisal must have been ordered through an Appraisal Management Company that is recognized by the new lender. If that lender does not utilize that particular AMC you cannot transfer the appraisal and will now have to pay for a new one. Also, the appraisal must be transferred directly from Taylor Bean to the new lender.

With the closing of Taylor Bean it is unlikely that they will continue to employ someone to do this task. In addition, even if they do have someone available for this task, there will be thousands of loans to go through which will make the process very difficult and time consuming. One major lender has announced that they will not take a transferred appraisal under any circumstance but they will lower their underwriting fee by the cost of the new appraisal. This will require that the consumer pay for a new appraisal up front. This illustrates one of the many bad aspects of the Home Valuation Code of Conduct.

According to Congress who passed this law, appraisals are supposed to be portable from one lender to the next but that is not the case and hopefully Taylor Beans

demise will draw attention to this matter.

Appraiser Active says: Chances are the appraiser has not been paid for their work!! Also, the HVCC is NOT a LAW and CONGRESS had nothing to do with it! However, we in the real estate profession hope CONGRESS will get moving and DO something about it.

UPDATE - August 7, 2009

An Appraiser from Massachusetts writes "Mortgage Broker called upset over the TBW closing, today, 08/07/2009. Her client gave SecurityONE a credit card payment of $600 for the appraisal.

The Mortgage Broker asked to me to re-assign the report as she has just down loaded the HVCC affidavit from TBW. She says I can just change the name on the report to another bank. She is upset over the $600. I told her I have not been paid. The HVCC and the affidavit have nothing to do with me. Now can the applicant have the credit company reverse the charge if my appraisal report is not used for a transaction? The report is complete and is in TBW, but has no value to TBW.

Did the HVCC think of the scenario? Was the borrower's appraisal fee protected with the HVCC?"

This Massachusetts Appraiser knows, regardless of being paid for his services or not, that simply changing the Client Name on the appraisal report is not an option. How is the borrower protected under the HVCC?