A bankruptcy judge has approved a settlement between the Federal Deposit Insurance Corp. (FDIC) and the now-defunct Taylor Bean & Whitaker (TBW) over the ownership of more than $1 billion in disputed loans and mortgage-related assets.
Judge Jerry A. Funk of the U.S. Bankruptcy Court approved the deal resolving one of the messiest recent collapses in the nation's mortgage meltdown. A few months back, TBW's CEO Lee Farkas was indicted on multiple fraud charges regarding the company.
The FDIC, the receiver of Colonial Bank of Alabama, had been sparring with TBW's trustee over ownership of various mortgage loans and other assets since the two companies collapsed a year ago after allegations of massive fraud.
At one point early last summer the Ocala, Fla-based nondepository had hoped to buy the bank, using borrowed money from mortgage bankers, wealthy individuals, and Troubled Asset Relief Program or TARP funds.
Colonial was TBW's primary warehouse provider with $3 billion in financing under three separate lines.
Under the settlement approved earlier this week, the FDIC becomes the recognized owner of Colonial Bank's 99% interest in about 3,400 loans with an unpaid balance of $696 million. These are participation interests in mortgage loans that TBW sold to Colonial.
In return, more than 3,200 loans with an unpaid balance of about $464 million plus another 579 loans with a balance of $89 million become the property of TBW's estate.
The result, according to court papers, is that the estate will receive $78 million in sale proceeds from TBW-owned property that's already been sold off. The settlement was first reported by Dow Jones.