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Breaking News: IndyMac Bank Seized by Federal Regulators
By Steve Foley Posted in Archived — Comments (1) / Email this page » / Leave a comment »
quote]The federal government said it took control of troubled IndyMac Bank today, in what regulators called the second-largest bank failure in U.S. history.
The Office of Thrift Supervision in Washington, the chief regulator of Pasadena-based IndyMac, said it transferred control of the $32-billion bank to the Federal Deposit Insurance Corp.
With all the talk about Fannie and Freddie and more possible bailouts this is devastating news! FDIC will make people whole on $100,000.00 or more and my guess is that everyone will be made whole after all is said and done!
The Dow is down 230 points and most people paying attention this morning saw the writing on the wall and a wholesale bail on IndyMac caused the seizure of the bank this afternoon!
is a two headed bank. They are - were - a regional depository HQ'd in SoCal. They were also a big mortgage bank. A big, very aggressive mortgage bank.
Bottom line, their mortgage lending and servicing operations appear to be dragging them down. They stopped accepting new files earlier this week, shut down their wholesale and correspondent operations and layed off a truckload of people. They sold their retail mortgaging and servicing business and announced they would fund refinance loans through the end of the month and purchase loans through August 15 with absolutely no extensions for any reason. Then, a day later, they did something unprecedented. They put out a bulletin to the effect that all "best efforts" rate locks (which would be every loan in their pipeline) had to be converted to "mandatory delivery" locks and would require a refundable 1% deposit due yesterday (two days notice). So, if you have a locked loan for $400K you had to pony up $4,000 to keep your loan in the funding pipeline. This is simply unheard of.
Now that Congress is up to their ears in "fixing" the housing market, you can expect a turnaround in the real estate market in maybe a decade. Maybe. Come hell or high water the residential market in areas where appreciation was the highest are still about 30% overpriced. Inventory is huge, Phoenix has roughly 60 months on MLS today and that does not include bank or builder inventories. Same for FL, NV, CA and a host of other markets.
On the mortgage side, loans are still available but only if you can document your income and have reasonable to good credit. High LTV jumbo and super jumbo (Dodd & BO) don't exist at any price. Bottom line, the pool of qualified buyers is shrinking while inventory increases. Prices have not and will stabilize until inventories are down to the 4 to 6 month range, including bank and builder inventory.
On a side, but related note, you haven't heard much of anything about bank loans to builders rolling over. Builders are just beginning to default and these defaults will impact depositories because they are not securitized as are residential mortgages. This will be a big problem probably later this year as the prime residential selling season closes and cash flow gets really tight.
Bottom line line to all of this... you ain't seen nothing yet.
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CongressCritter™: Never have so few felt like they were owed so much by so many for so little.