Thursday, Sept. 3
Written 10 a.m. EDT
WHAT TBW DID: As the 12th-largest mortgage lender in the country was about to collapse, it transferred its customers' escrow money into the bank account that held the company's operating funds, according to Florida's Office of Financial Regulation. The company paid employees out of that bank account. And customers' escrow refund checks bounced.
That's the gist of what happened with Taylor, Bean & Whitaker. The Ocala, Fla.,-based mortgage lender and servicer shut down and declared bankruptcy last month.
Florida's Office of Financial Regulation, or OFR, filed two cease-and-desist orders against TBW. In the second order, the OFR says TBW had its customers' escrow money in a separate bank account, as required by law, but the bank abruptly closed the account. The bank is unidentified.
TBW tried to open an account at two banks, according to the OFR. Neither bank would do business with TBW, so the mortgage company deposited customers' escrow money into its operating fund. That's a big no-no. "If I did something like that, I'd be in jail," a mortgage broker tells me.
The OFR says TBW executives promised that they were keeping the escrow and operating funds separate in the company's internal accounting, even though both baskets of money were in the same bank account.
I have several e-mails from readers who say they got escrow refund checks from TBW that bounced. One reader says the check didn't bounce, but TBW put a stop-payment on it. I'm asking the folks who e-mailed me to call their banks and find out exactly what happened: Did the TBW escrow refund check come back as insufficient funds, or did TBW stop payment?
The bottom line is that TBW employees were paid out of the operating account, according to the OFR. But customers' escrow refunds apparently went unpaid out of the same account. What do you call it when a company stiffs you the money that it owes you, but pays its employees with money out of the same account?
I'm making a request to readers who have or recently had mortgages serviced by TBW. At this e-mail address, please let me know the following:
If you got an escrow refund check that "bounced," exactly what happened? Was it returned as nonsufficient funds, or did TBW stop payment? What's the date on the check, and when did your bank find out that TBW wasn't honoring it?
If you currently have a mortgage serviced by TBW, could you please call your homeowners insurance company and let me know if TBW has paid any premiums that were due recently? If TBW didn't pay the premium even though you paid for it through your escrow account, ask the insurance company what recourse you have.
I'm worried. If TBW isn't honoring escrow refund checks, is it paying its customers' insurance premiums and property taxes?
I'm also looking for an attorney who is well-versed in the law governing escrow funds, and especially what happens when a mortgage servicer intermingles escrow and operating funds, then declares Chapter 11 bankruptcy. If that's you, e-mail me.
The OFR is the investigative agency in this matter. I'm not exactly filled with hope because I question their competence. Here's the home page of Florida's Office of Financial Regulation. You can go to this page to find out how to file a complaint, or you can call (800) 848-3792. The second cease-and-desist order is a slow-loading PDF file.
From my brief interaction with the OFR, I get the sense that they don't understand the scale of this. I'm not sure that they even know that people's escrow refund checks aren't being honored. Frankly, I don't think the OFR is taking this matter as seriously as they should. Perhaps that's unfair. I think, though, that if they took this seriously, they would return my calls. I got an e-mail from a reader who complained to a lot of agencies, including the OFR. The OFR hasn't called him back.