The Financial Dominoes Continue to Fall

Just last week a mortgage originator, Taylor Bean & Whitaker, based in Florida but with nationwide offices, was shut down by Federal folks for some funny accounting practices. Today, Colonial Bancgroup, apparently with some ties to Taylor Bean and also the nations largest warehouse mortgage lender was seized by regulators.
Link http://www.forbes.com/2009/08/14/colonial-bancgroup-bbt-business-wall-street-fdic.html
Why does this matter to anyone? It will result in a further tightening of already very difficult mortgage originations. Fannie & Freddie account for something like 90% of residential mortgages but the applicants not fitting neatly into their box just lost a substantial funding resource. The upshot of this will be a further chilling effect on sales and refinances for a very large group of people.
When Taylor Bean was closed my email box started to fill with offers from other originators offering to help me just in case I had some loans in the Taylor Bean pipeline. When the sub-prime collapse took 100's of mortgage originators out of the market the email box was filled with offers to help place sub-prime clients in the the FHA system. Now the FHA system has overextended in these bad mortgages. This will probably come to be known as sub-prime #2. Greed has a way of distorting the learning curve.
Just as the beating wings of a butterfly in Brazil may contribute to the breeze wafting over your patio, every incident in the financial marketplace has an impact on your well-being.
As usual,
Thanks for visiting.