Freddie Mac has entered into a proposed settlement with creditors of the Taylor, Bean & Whitaker Mortgage Corp. (TBW) bankruptcy that will allow the GSE to gain control of TBW-related mortgage servicing rights and $54 million in loan receipts in TBW deposits.

In return, the GSE will pay $61 million to creditors to resolve their claims against Freddie.

A bankruptcy court in Jacksonville, Fla., must approve the TBW settlement. In August 2009, TBW, an Ocala, Fla., mortgage-banking company, was busted by federal law enforcement agents for selling fictitious loans to Freddie Mac and others.

If the settlement is approved, Freddie will be able to sell TBW-related servicing rights "subject to a $185 million minimum net sales price," Freddie says in a securities filing.

Navigant Capital Advisors and Milestone Advisors are expected to act as co-brokers for the sale.
If the settlement is approved, Freddie expects to book a "one-time gain in income of less than $250 million," the June 22 filing said.

The GSE has already recognized a $690 million loss due to TBW's fraudulent schemes and it expects to book additional losses going forward.

The settlement does not extend to creditor claims involving Ocala Funding — a TBW subsidy. "Ocala and its creditors may attempt to assert fraudulent transfer and possibly other claims totaling approximately $840 million against us," Freddie says in the filing with the Securities and Exchange Commission.

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