Mortgage finance company Freddie Mac said Monday it could lose $500 million or more as a result of the bankruptcy protection filing of Taylor, Bean & Whitaker Mortgage Corp.
In a regulatory filing with the Securities and Exchange Commission, government-backed Freddie Mac said Taylor, Bean received and processed some of Freddie Mac's borrower funds through Colonial Bank, which was shut down by regulators in August.
Freddie said it filed a proof of claim for about $595 million against Colonial Bank on Nov. 18. That money includes payoff funds, borrower payments of mortgage principal and interest, as well as taxes and insurance funds received by Taylor, Bean on loans.
Freddie Mac said it's unable to estimate its total losses related to the bankruptcy filing, but noted that the amount "could be significant."
Taylor, Bean & Whitaker, which managed a mortgage servicing portfolio of about $80 billion, filed for Chapter 11 bankruptcy protection in August after moves by regulators led to the shutdown what had been one of the nation's biggest independent mortgage bankers. The Federal Housing Administration had suspended the company's authority to issue FHA-insured loans, and then both Freddie Mac and Ginnie Mae suspended Taylor, Bean as an issuer of mortgage-backed securities _ mortgages bundled and sold off to investors.
Taylor, Bean appealed the Freddie Mac suspension, but said it had no choice but to file for bankruptcy protection as it could no longer operate its business normally. It has said it believes regulators' moves were related to the investigation into the failure of Colonial Bank, which for years had been Taylor, Bean's main bank. In mid-August, regulators shut down Colonial Bank's parent, Colonial BancGroup Inc., the biggest bank to fail this year with about $25 billion in assets.