FHA Drops Lender on Suspicion of Fraud

This is a pretty big deal of a story that just broke. What it means, is that the 3rd largest FHA lender can no longer do FHA loans effective immediately, even if there is a FHA loan is progress. Locally, Mutual Bank is the biggest lender that is effected by this.

The FHA's third-biggest lender, Taylor, Bean and Whitaker Mortgage Corp., has been dropped from the agency's loan program due to possible fraud.

An independent auditor found "irregular transactions that raised concerns of fraud," but FHA said the Florida-based firm failed to file a mandatory annual financial report and indicated that there were no outstanding issues related to the audit.

Experts say it could fold as a result; and with less competition in the industry, mortgage rates could rise.

"It's just a question of demand and supply," stated Equity Now Inc. President Michael Moskowitz. "If Taylor Bean goes down, it's a pretty big deal."

Source: Bloomberg David Mildenberg and Jody Shenn (08/05/09)