Magazine article American Banker

Taylor, Bean in Symbiotic Relationship

Magazine article American Banker

Taylor, Bean in Symbiotic Relationship

Article excerpt

Byline: Kate Berry

It's come to this: A nonbank mortgage originator, facing the loss of its main warehouse lender, has to rescue that lender to ensure its own survival.

That is the unusual situation Taylor, Bean & Whitaker Mortgage Corp. appears to be in.

The Ocala, Fla., wholesale lender is said to be the lead investor in a group that is close to injecting $300 million into Colonial BancGroup Inc. Tuesday was the deadline for the $25.8 billion-asset Montgomery, Ala., company - which has suffered large losses on loans to developers and home builders - to raise its capital ratios or face formal regulatory orders and possible seizure. (See story on page 16.)

According to National Mortgage News, Colonial is the top warehouse lender, with $2.9 billion in commitments at the end of 2008. Catherine Kissick, the senior vice president in charge of Colonial's warehouse business, said last month that she wanted to expand that business but could not because of the company's capital problems.

One warehousing source said Tuesday that Taylor, Bean, a Colonial warehouse client, had approached other mortgage lenders that depend on such financing to join the investor group.

Ray Bowman, Taylor, Bean's president, would not discuss the situation.

"This is an emergency, so what else could they do?" said David Olson, a managing director at Access Mortgage Research and Consulting Inc. in Columbia, Md. "They can't get warehouse lines and they would be forced into being a much smaller player."

Only 16 warehouse lenders are still around to fund mortgages originated by nondepositories nationwide, a tenth as many as a year ago, Olson said.

The concept of one or more mortgage firms taking an ownership stake in their warehouse lender is highly unusual, industry experts said.

"It's certainly an interesting strategy," said James Reynolds, the managing partner of Reynolds Group, a warehouse consulting firm in Summit, N. …

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