BofA Subservices TBW MSRs

Ocala, FL-Ginnie Mae reportedly assigned Bank of America, Charlotte, N.C., to subservice its $25 billion mortgage servicing rights portfolio formerly serviced by Taylor, Bean & Whitaker here, according to industry sources, and may bid out the receiveables.

Bank of America has not returned a request to confirm this event.

TBW was suspended on Aug. 4 by Ginnie Mae as a seller/servicer. According to a TBW memo, it was also suspended as a Freddie Mac seller on the same day. Freddie Mac would not comment on the memo. The company was also suspended as a participant in the Federal Housing Administration mortgage insurance program.

Furthermore, the Department of Housing and Urban Development is looking to bar TBW chief executive Paul Allen and president Ray Bowman.

According to an industry source as of Aug. 7 Freddie Mac had yet to seize its servicing rights' portfolio from TBW, although the source said it was probable that it would.

One investment banking official noted that TBW is a major servicer of Freddie Mac-guaranteed loans. "They haven't serviced for Fannie in years," said the banker. At the end of March, TBW, a non-bank, ranked 13th nationwide among residential servicers with $78.2 billion in receivables, according to the Quarterly Data Report.

The investment banking source believes eventually Ginnie Mae will "bid out" the receivables. The source added, "I'm not sure what Freddie is doing with theirs - ultimately it will be between Freddie and TBW's lenders to decide. The company had borrowed against its MSRs."

At press time officials at GNMA, Freddie Mac and TBW had not returned telephone calls about the matter.

But in its press release announcing the TBW suspension, Ginnie Mae president Joseph Murin said, "I would like to reassure TBW's customers whose loans serve as collateral for Ginnie Mae securities that, although this action will result in a new servicer, the transition will be seamless for them."

In its memo, where TBW said it would cease all origination operations immediately, the company said it was "cooperating with each of the agencies with respect to its servicing operations and expects to continue to service mortgage loans in the wake of these events."

A spokeswoman for the Florida Office of Financial Regulation said TBW still has an active license in the state. The Massachusetts Commissioner of Banks has issued TBW a cease-and-desist order.

TBW had put in an application for a servicer's license in New York to comply with a new state law, a spokeswoman for the state's Banking Department said. That application is under consideration. The company was not licensed as an originator in the state.

Fitch Ratings, New York, cut TBW's primary servicer ratings for prime and alt-A mortgages from RPS 3+ RWN (the last three letters standing for ratings watch negative) to its lowest rating of RPS5.

Fitch cited "recent events which negatively impact TBW's to effectively service its residential servicing portfolio. The company is currently under investigation by various regulatory entities."

TBW had been the leader of a group making an investment into warehouse lender Colonial BancGroup, Montgomery, Ala. When the deal collapsed, the special investigator general for the Troubled Asset Relief Program conducted a raid on both companies, Colonial's taking place at its warehouse lending offices in Orlando.

Colonial said it is the target of a federal criminal investigation.

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