Is your loan with Taylor, Bean & Whitaker? You may be in BIG TROUBLE, READ THIS NOW

[MattH]

Blog posting at Bankrate

Wall Street Journal

Atlanta TV Station Report

Will County, Illinois Treasurer info

Summary: the FDIC says TBW has failed to make payments of escrow funds to tax collectors and insurance companies, so at least 500,000 homeowners could be hit with tax liens and/or lose their insurance coverage through no fault of their own.

Article on possible resolution

FDIC is trying to get some of $1.9 Billion inmortgage and escrow payments currently suspended in limbo freed up so that taxes and insurance can be paid on behalf of innocent homeowners.

Part of the problem, according to Florida authorities, is that TBW may have mingled escrow funds with their operating funds, which of course is highly illegal precisely because it puts innocent customers at risk.

Message Edited by MattH on 09-18-2009 11:55 PM

[Anonymous]

thanks for the headsup.  I think our taxes got paid as I logged into our county website last month to check.

I will check insurance.

Also, we had money paid into closing costs for a refi they never finished that have now magically disappeared.

[IOBA]

Thanks for the posting.

My parents had a similar experience.  The mortgage company did not make their tax payments or insurance payments.  When my parents went to refinance, they learned that there was a tax lien on their property which had to be paid in full prior to refinancing.  (Anyone have an extra 10k lying around?  Oh wait, let's add interest, late fees, and penalties!)

Since the insurance had lapsed on the house, the mortgage company added their own insurance policy to the principle of the mortgage.

It was a HUGE mess.  My parents had faithfully paid their mortgage, which included escrow payments.  Then to learn that the previous three years they had been without insurance coverage, the principle increased on their mortgage, and they were about to loose their home to tax lien foreclosure??  Add to the stress that they had to magically come up with 36k to get everything right again when everything was said and done.

Their mortgage company was not going out of business.  They just screwed customers.  I am not sure if my parents ever recovered the money or not.

I do remember that they had another issue with the SAME mortgage company.  When they went to refinance a few years later, they were denied.  Why?  Because they had TWO mortgages on the house, one which they were in default on.

Guess which one reported them as being in default?  Yeah, the same one that didn't pay the taxes or insurance for three years.

That was another HUGE mess to clear up!

It's all over and done with.  A lot of man hours went into the mess.

Lesson -- don't use your house as a bank.

Lesson -- always follow up with your insurance company and your tax office yearly to make sure bills are being paid.  Request a copy or a receipt be mailed to you. 

If any of you are in the boat where your insurance has been cancelled for non payment -- pay the premium NOW to get reinstated!  Deal with the BS later.  You do not want to get caught without insurance on your house! 

[DallasLoanGuy]

communication is key.

i am sure some will have a problem.... most wont.

[ArmyStrong]

Is there not laws to ensure things like this can't happen??? That's unbelievable!! And VERY scary! GEEZE.

[Anonymous]

there are all kinds of laws, but the issue is that in most of these cases, when a compnay gets caught, they get closed down and file BK.  At that point their assets are nowhere near enough to cover the money they owe people.  So you can either get a lawyer (which you will have to pay...You can forget about getting lawyers fees paid when they do not even have enough assets to recover the initial amounts) or you can pick up and move on hoping that whoever you owe money to will be understanding.

I have now had my loan for 11 months and have had 2 companies go under and am looking at 10K in losses or more over the last year becasuse of it.

[ArmyStrong]

Sounds like there needs to be some ammendments done, like yesterday. You would think with all that's going on these days, it'd be a no-brainer. Would it be prudent (if possible), to stick with banks, and long-standing, reputable mortgage companies? (Although NOTHING is guaranteed these days.)

(Sorry if I'm thread jacking)

[Watchmann]

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@IOBA wrote:

Lesson -- always follow up with your insurance company and your tax office yearly to make sure bills are being paid.  Request a copy or a receipt be mailed to you. 

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Even better, avoid escrow situations if at all possible.  I put 20% down and paid an extra 0.25% of loan as a one time fee.  Now I don't have to worry about screw ups for insurance and taxes, it's up to me to get insurance paid and taxes paid.  Totally worth it.  I had escrow once on another property and it was never done right.

[MattH]

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@Anonymous wrote:

there are all kinds of laws, but the issue is that in most of these cases, when a compnay gets caught, they get closed down and file BK.  At that point their assets are nowhere near enough to cover the money they owe people.

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I'm no lawyer, but I gather that's basically what's happened in this case: their remaining assets are tied up in BK court, and the FDIC is trying to get escrow payments unfrozen (which would mean less for all their other creditors so multiple parties must either agree to this or be forced by the BK court to accept it).  Laws are not magic, they cannot always prevent bad things from happening to innocent people.

So to protect ourselves, we must verify that important details are being handled correctly.  Even a solvent and competent servicer will make mistakes from time to time (simple arithmetic: if some big bank has 4 million mortgages and they get everything right on 99.95% that still means 20,000 of them will have to get some kind of mistake fixed).

As The Mortgage Professor points out on his excellent website, one of the main reasons why servicing ranges from mediocre to poor is that borrowers have no power over the choice of servicer: loans get bought and sold all the time, and nobody asks us what we think!  So they have little incentive to compete on customer service.  I've been fortunate myself, while my mortgage has changed hands a couple of times there have not been any problems.  But I check every statement very carefully.

Message Edited by MattH on 09-21-2009 08:20 AM

[Anonymous]

as far as trying to stick to big banks/etc, TBW was big.  IT was one of the biggest FHA lenders/servicers out there I believe.

ALso, no matter who you get your laon through, they can sell it at any time to whomever they want so there are no guarantees.

As far as further protections there can be none.  When a company goes under, anyone who owes money gets listed in order of the merit of their claim.  People that have secured debt from the company are first(Meaning that the company secured the loan with some of it's assets)  When they are paid in full (or partial if they agree to it), then everyone else stands in line to see what is left.  The protection we have is more criminal in that the people who were knowingly commiting fraud will got o jail for it, not civil (as in renumeration)