Taylor, Bean and Whitaker Mortgage Corp’s expulsion from the ranks of Federal Housing Administration lenders may make it harder and more expensive for cash-strapped consumers to finance home purchases.

The FHA, the government mortgage insurer, yesterday suspended Taylor Bean, its third-largest lender, citing possible fraud. It’s 'distinctly possible this is going to be the end of Taylor Bean,' said David Lykken, managing partner at consultant Mortgage Banking Solutions in Austin, Texas.

FHA mortgages represent about half of all new loans for home purchases, up from about 10% at the start of 2008, as borrowers with low down payments or poor credit get turned down for other financing, according to a Bank of America Corp. report last month.