Goliath? Are you alright?
Posted by: Greg Fischer Post date: August 6th, 2009Yesterday, Taylor, Bean and Whittaker, a wholesale lender who last month was the 5th largest volume mortgage lender in America, ceased its lending operation.
While rumors about TBW have floated for over a year (a few of them well founded), I don’t believe that many of us expect them to just vanish with a wisp of smoke. And while the loss of a national lender brings with it a certain sadness for those in the industry, the implications reach far beyond that.
As a group, we haven’t closed a loan with TBW in nearly a year. Not for any concern about strength of company, liquidity or anything like that. We’re just choosy about performance, price and follow through. On any given day, our relationships with other lenders landed our loan applications there.
My concern for the future isn’t how will we continue without Taylor, Bean. There are scores of other lenders vying for the business. But to see a lending giant just clutch its chest and drop with a thud while on a Wednesday stroll is alarming. We were supposed to be beyond the point in history where Big mortgage banks just stopped being. A few years ago, we became accustomed to Sub Prime lenders just announcing that they were done. Two years ago (nearly to the day – August 1, ‘07 kicked off round 2 of the lending pandemic) I watched the Alt-A players wink out like candles. But in the last 2 years, no serious national players have hit the Implode-o-meter. Now here we are, partying like it’s Spring ’06.
How many thousands of people expecting to purchase a home this month are suddenly without funds to do so? Of those, how many won’t find another solution? Your refinance closed last week, you’ve already planned for the new payment come September, you’re finally ready to exhale again and – whoops! No money for you either.
And with a high profile player like TBW suddenly all over the lead stories of the money channels, do the fingers once again get pointed at naughty mortgage brokers, peddling their filthy predatory loans, causing the plight of humanity and the failure of the very financial system in this country? What about all the poor souls now left homeless because their broker forced them into a “risky” TBW loan (risky like FHA or Freddie Mac mind you). What is President Obama going to do about it?
Mourning the loss of an industry giant is never a happy moment. But when the crash to earth rumbles throughout the mortgage and banking industry, the shock waves created may cause further damage. At some point we start to wonder who is next. When the monster in the movie is finally defeated and life starts to return to normal on Elm St, and then just before the credits roll it springs up and kills just one more victim, the implication is that a sequel is coming. That’s about the very last thing we need.
