 |
| 30 Yr Fix |
6.40% |
-0.07% |
| 15 Yr Fix |
5.93% |
-0.07% |
| 1 Yr ARM |
5.33% |
0.04% |
| 5/1 ARM |
6.03% |
0.04% |
| 30 Yr Tres |
4.38% |
-0.01% |
| Fed Prime |
5.00% |
-0.25% |
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IndyMac Joins Roster of Banks to Fold its Mortgage "Tent."
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IndyMac has announced that, effective yesterday, it is closing both its wholesale and retail production channel and will no longer accept any new mortgage loan submission or rate locks. It will also reduce its workforce to around 3,200 from the current level of 7,400. The bank will also, apparently, continue its other retail banking operations.
IndyMac Bankcorp, Inc is the holding company for IndyMac Bank, the 7th largest savings and loan and the 2nd largest independent mortgage lender in the nation. It claims to have financed the construction of over 70,000 new homes over the last five years but has consistently been listed among those financial institutions in serious trouble over the mortgage crises.
The stock had reached $.71 cents Monday after trading as high as 31.32 in the last year and was delisted from NASDAQ. There were no announcementS or news items on the Yahoo IndyMac website on Monday, but the company's own website made the following statement:
"Given the continued downward trend in home prices and a resulting increase in our forecasted credit losses and the related downward trend in the pricing of all mortgage related assets in the capital markets, especially mortgage-backed securities where we have experienced significant rating agency downgrades this quarter, we expect our loss for the second quarter to be larger than Q108, but it is difficult at this time to be more precise given the significant uncertainty surrounding accounting estimates, fair value accounting and other accounting matters.
"… We have been working closely with our federal banking regulators with respect to the actions that they and we must take to meet our mutual goal of keeping Indymac safe and sound through this crisis period. In that respect, based on information we have provided to our regulators, they have advised us that we are no longer "well capitalized", which we stated on May 12 was a possible scenario. Our regulators have also asked us to submit to them a new business plan for their review and approval, something on which we have been working with them for some time. We have agreed on the basic elements of the plan, and the regulators have directed us to begin executing on it. An important element of our plan is to improve our capital ratios. Without an external capital raise, the traditional way to improve safety and soundness is to sell assets and shrink the balance sheet, which in normal times generally has the effect of improving capital ratios and bolstering liquidity. Yet in this environment, where either there are no bids for most of IMB's mortgage loans and securities or the bid/ask spreads are abnormally wide, "fire-selling" assets would actually deplete capital further. As a result, the most realistic and cost-effective way to shrink both our balance sheet and our servicing rights asset (which, as discussed in previous communications, is up against the regulatory cap limit), is to curtail most new activity.
"As a result of the above, we have made the difficult decision, effective July 7, 2008, that we will no longer accept any new loan submissions or rate locks in our retail and wholesale forward mortgage lending channels, except for our servicing retention channel. We plan to honor all of our existing rate-locked loans and will continue to fund these loans in the coming weeks. While the managers and employees in these units have worked incredibly hard, these units are not currently profitable due to the continuing erosion of the housing and mortgage markets. At the same time, these operations take up significant balance sheet capacity and "feed" growth in the servicing asset, an asset we need to shrink given its size relative to our existing capital."
Unfortunately, the above actions will necessitate the reduction in our present workforce from approximately 7,200 to roughly 3,400 or so over the next couple of months, which should reduce our operating expenses by roughly 60%. We will retain about 1,100 employees in loan servicing in Kalamazoo and Austin; 350 in our servicing retention group in Irvine and Kansas City; 800 at Financial Freedom, primarily in Irvine, Sacramento, and Atlanta; 400 in our Southern California retail and web bank; 500 in portfolio management and administration, largely in Pasadena; and 250 in discontinued businesses. In building Indymac up from 4 employees in 1993 to its present size, we have had to retrench and then rebuild several times over the past 15 years, but clearly these are the largest and most difficult staff reductions we have ever had to make. If we had another alternative, we clearly would have chosen it, as we understand how painful these workforce reductions can be for the affected employees and their families. Given Indymac's current financial position and these significant layoffs, I strongly believe it is appropriate that I further materially reduce my own compensation. As a result, I have requested of Indymac's Board of Directors that they reduce my base salary by 50%.
The memo was signed by Michael W. Perry, CEO."
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Comments (13)
| following up here with the comments from the new kids on the block.
Indymac's platform, emits - was genious and very smooth. the ability to prepare your own closing docs was cutting edge. as far as getting approved and closed, let me say this, saved the day,
Indymac had the number one broker platform. |
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| Above Posted By:
the management
| Tue, 8 Jul 2008 14:37:43 EST |
| Indymac is the king of the hill. Pioneered level price adjusters for the non traditional, fixed rates - 30 years - safe alternative lending, the original product to combat against recent subprime, todays it's in fnma' du.
big loss year, probably the biggest yet.
in the name of the real king,
adios ladys and gentlemen till we meet again, may god bless,
Elvis has left the building, thank you and good night. |
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| Above Posted By:
the management
| Tue, 8 Jul 2008 14:28:12 EST |
| I have a construction loan with them, they stop funding the rest of the draws my house is on stand still, what can should I do?
let it go to foreclosure of pay the 100k to finish the house? |
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| Above Posted By:
VINH TRUONG
| Tue, 8 Jul 2008 12:00:48 EST |
| I am a Realtor in Florida. My client tried to short sale a home that had indymac paper. It took 6 months of dancing on their part only to tell us the offer was not acceptable. Lies, lies and more lies. When the company started it was ok. It had good intentions. "The road to hell is paved with good intentions". bon voyage. |
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| Above Posted By:
tom
| Tue, 8 Jul 2008 11:02:25 EST |
| Where and when will it all end ! This is so sad. I trust those on the national scene who are in positions of influence - those in the congressional arena - will act quickly to remedy this mortgage / real estate crisis quickly. Perhaps we need to see how many loans have interest rates scheduled to reset in following next 12 months and use this calculation as a baseline to project how far out this problem of bad loans extends into the future. But - we will have yet to balance it all with the energy / fuel / employment issues as well. But - again there goes the "but" we have to identify a starting point to stop the bleeding. I vote to start by freezing the interest rates on all 80/20 loan products, allow homeowners to keep and stay in their homes by keeping mortgage loan payments at their present levels. We can then stop adding to the homeless rolls, the rental subsidies, the food stamps, the crime wave, etc. and move forward by focusing on incentives to address other issues in crisis, namely fuel, energy, employment, to name a few. In other words, we need to redirect the sacrifices we are already making. Do I get a vote from anyone? Is anyone listening? |
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| Above Posted By:
Maurice
| Tue, 8 Jul 2008 11:00:10 EST |
| I think, based on our experience, that Indymac was destined to fail. We're a relatively small, but quality Mortgage Broker company. Out fallout is less than 5% (for all reasons... program changes, etc.). When we first signed up with Indymac (against the recommendations of other Brokers in our market area) we sere surprised to learn that Indymac charged a $400 fee to apply. We applied and paid the fee. It took OVER SIX MONTHS and multiple resubmissions (they kept losing our application) to finally get an approval. They did refund the $400. We closed about three loans with them. Two of the three loans were absolutely exasperating experiences. The service was the worst we've ever experienced (even worse than Countrywide!). Needles to say, we only used Indymac when there was no other option. Then, several months ago, we needed to send a loan to Indymac. They'd suspended our relationship because we hadn't funded enough loans with them. Very understandable. We were told we could reapply (with another application fee) but that we'd have to fund a minimum number of loans per month. I explained that we most likely wouldn't send them the minimum number required, but that everyone we sent WOULD fund. Quality didn't matter. It was volume. And, with such incredibly bad service, they remained the only wholesale lender to charge a fee to apply. I told the account executive I wished him luck, but that he'd better be looking for another job because with that approach to business, they weren't going to last much longer. I wish I could predict tomorrow's pricing as well as I could predict the failure of Indymac. |
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| Above Posted By:
Joe
| Tue, 8 Jul 2008 10:42:59 EST |
| Indymac was never a good institution, more than once they end up having trouble. Hope this time they will be gone for ever |
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| Above Posted By:
Angel Burgueno
| Tue, 8 Jul 2008 10:03:25 EST |
| IM not surprised, I put an offer on a Indy Mac bank owned home over three months ago and have heard nothing back. They never return calls or emails and my realtor has has it with them. |
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| Above Posted By:
Anonymous
| Tue, 8 Jul 2008 09:36:07 EST |
| So what happens to those who currently have loans o/s w/indymac and are behind in their mortgage and equity lines of credit? |
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| Above Posted By:
Anonymous
| Tue, 8 Jul 2008 08:50:14 EST |
| Interesting - the CEO feels some measure of empathy, read to the end. Pretty sure the cwide CEO didn't give up anything. |
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| Above Posted By:
Vicki
| Tue, 8 Jul 2008 08:38:30 EST |
| I was an AE for Indymac last year for a short time, only two months. Within the first week of being hired I recongnized I had made a mistake and decided to make a plan to move on as soon as possible. The issue was the complicated way in which loans were processed. What you had to put brokers through to get a loan done was so unbelievably frustrating for them that it got to the point it just wasn't worth it. I talked many brokers (who had IM before and had issues) into trying once again...all I did was drag them through the mud once again. Their systems were overly complicated and had they changed their processing model and tightened guidelines they could have made it in my opinion. Simply put...brokers didn't like to use IM and only would if they couldn't find the product elsewhere. This is too bad....lots of good friends have lost their jobs...sad to see. |
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| Above Posted By:
Mike
| Tue, 8 Jul 2008 08:16:30 EST |
| Indy Mac was a good bank, did lots of good loans and had good products. Sorry to see them go.
The one who should really fold up their tent (s) is Countrywide. They have to be the worst mortgage bank in the country. Their LO's and Managers outright lie to borrowers, bring them to the table to close and all of a sudden it's a new deal. They are famous for that act. They are in lawsuits in I don't know how many states for Predatory Lending, and I'm sure there will be many more states that join in. They are even far worse that Ameriquest was and we all know what happened to Ameriquest. The CEO should be put in Jail, not just put out of business. But like all the others with "deep pockets and connections" he'll walk away with Millions and Millions. Can't understand what B of A is doing. They can't possibly bail out Countrwide unless they are prepared to spend hundreds of millions correcting all the wrongs. But then again B of A will borrow that money from the FED and who pays for it? People who pay taxes, the little people, very sad state of affairs. They should start putting people in jail and not just slapping them on the wrist. |
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| Above Posted By:
Bob in the Mtg Industry
| Tue, 8 Jul 2008 08:01:02 EST |
| Hey, Good Bey Indymac ... when's the Fed's going to look into with GMAC ResCap .. opps, private corporations play by different rules |
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| Above Posted By:
Anonymous
| Tue, 8 Jul 2008 07:52:24 EST |
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