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Taylor Bean and Colonial Bank failures could cost Freddie Mac $1B

Federally run home loan guarantor Freddie Mac said the ripple from failures of Ocala-based Taylor, Bean & Whitaker and Colonial Bank exposes it to more than $1 billion in potential losses.

In a regulatory filing Monday with the Securities and Exchange Commission, Freddie Mac — the Federal Home Loan Mortgage Corp. — said exposure to Taylor Bean-related losses could keep swelling.

Taylor Bean was forced to close its doors and lay off more than 1,000 people in Ocala in August amid an inquiry into its loans warehoused through Alabama-based Colonial Bank, at the time one of the biggest banks operating in Florida. The closure triggered the failure of Colonial as well; the FDIC was named receiver of the bank, selling off its primary assets to BB&T. After Taylor Bean filed for bankruptcy, Freddie Mac said its exposure to loan repurchase obligations was about $500 million as of Sept. 30.

Taylor Bean also serviced loans that were owned or guaranteed by Freddie Mac. It used certain bank accounts, primarily at Colonial Bank, to deposit borrower funds that it had received and processed for Freddie Mac.

Last week, Freddie Mac filed a proof of claim against Colonial totaling $595 million. The sum, Freddie Mac said, represents a host of borrower funds, including loan payoff funds, borrower payments of mortgage principal and interest, and taxes and insurance payments that were held by Taylor Bean.

Taylor Bean customers across the country have complained for months that payments over the summer weren't credited and that they've been unable to secure insurance and tax payments that had been held by the company.

Freddie Mac acknowledged that the scope of its exposure is still unclear. "At this time, Freddie Mac is unable to estimate its total potential exposure related to TBW's bankruptcy," its filing said. "However, the amount of additional losses related to such exposures could be significant."

Jeff Harrington can be reached at [email protected] or (727) 893-8242. Follow him on Twitter at twitter.com/jeffmharrington.

Taylor Bean and Colonial Bank failures could cost Freddie Mac $1B 11/24/09 [Last modified: Tuesday, November 24, 2009 9:26pm]
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