From Saturday, June 28 Mortgage Strategery Entry:
"I could see at least a half dozen major wholesale mortgage lenders close their doors in the next six months. I'm not naming names at this point, but I've got several lenders on my major distress list."
Yes, Indymac Bank was on the list.
Honestly, IMB was the most obvious name on the list, but they're one of our lenders, so out of courtesy, I don't want to name specific lender names in public. I simply steer away from them and don't send them any loans unless I absolutely have to, because there's nothing worse than having a loan with a lender that is going out of business. You've got to re-submit with a new lender, if it's a purchase transaction, you lose a great deal of time, and it's frustrating for everyone involved.
Ok, so how do I come up with my distress list. Pretty easy actually. Two steps: 1) Banks that are still in business that used to do a lot of Alt-A and Option Arm business, 2) Look at the stock price, has it nose-dived and is not pulling out of the nose-dive?
"I could see at least a half dozen major wholesale mortgage lenders close their doors in the next six months. I'm not naming names at this point, but I've got several lenders on my major distress list."
Yes, Indymac Bank was on the list.
Honestly, IMB was the most obvious name on the list, but they're one of our lenders, so out of courtesy, I don't want to name specific lender names in public. I simply steer away from them and don't send them any loans unless I absolutely have to, because there's nothing worse than having a loan with a lender that is going out of business. You've got to re-submit with a new lender, if it's a purchase transaction, you lose a great deal of time, and it's frustrating for everyone involved.
Ok, so how do I come up with my distress list. Pretty easy actually. Two steps: 1) Banks that are still in business that used to do a lot of Alt-A and Option Arm business, 2) Look at the stock price, has it nose-dived and is not pulling out of the nose-dive?
Also, Indymac Bank pulled out of the construction lending business back in January.
I knew there was a big problem at IMB because we had an extremely strong construction loan (very strong borrower) with IMB back in December '07, and IMB Construction Underwriting kept coming up with really lame issues regarding the loan: huge cut to LTV because the property was 20.1 acres and not 20 acres, they cut the appraisal value by $40,000 when the appraisal was based on cost basis because comps were too far apart (just as an fyi, in some parts of the country there aren't many comparable sales in the area, especially when the closest neighbor is 10 miles away). When lenders start doing stuff like Indymac was pulling, I take it as a cue that something is wrong with the company because they are giving us reasons not to do the loan with them, basically begging us to pull the loan. Which I did.
I knew there was a big problem at IMB because we had an extremely strong construction loan (very strong borrower) with IMB back in December '07, and IMB Construction Underwriting kept coming up with really lame issues regarding the loan: huge cut to LTV because the property was 20.1 acres and not 20 acres, they cut the appraisal value by $40,000 when the appraisal was based on cost basis because comps were too far apart (just as an fyi, in some parts of the country there aren't many comparable sales in the area, especially when the closest neighbor is 10 miles away). When lenders start doing stuff like Indymac was pulling, I take it as a cue that something is wrong with the company because they are giving us reasons not to do the loan with them, basically begging us to pull the loan. Which I did.
Sure enough, about two weeks later (in January of '08), Indymac announced that they were exiting the construction lending business.
There are other lenders that I'm pretty certain will meet the same fate as IMB.
Saturday, July 12, 2008:
http://www.bizjournals.com/atlanta/stories/2008/07/07/daily91.html
Feds shuts down IndyMac Bank, two ATL centers impacted
Federal regulators closed Pasadena, Calif.-based Indymac Bank late Friday -- the shuttering of the largest bank nationwide since the Savings & Loan Crisis in 1991, and a move that will affect two Atlanta operations centers.
The closure also marks the second-largest closure of a bank since 1934, according to the Federal Deposit Insurance Corp.
In a unique twist, IndyMac Bank's closure is blamed, in part, by the public disclosure of a letter by U.S. Sen. Charles Schumer (D-N.Y.), expressing concern about the bank's ability to operate going forward.
The bank had $32 billion in assets and $19 billion in deposits, according to the Office of Thrift Supervision and FDIC.
At the time of closing, the bank had roughly $1 billion in uninsured deposits.
The FDIC announced the roughly 10,000 customers with uninsured deposits will receive their deposit amounts.
The FDIC also said it expects the fund to pay between $4 and $8 billion out of its deposit insurance fund, which backstops all U.S. bank deposits to a certain dollar level, in part to stave off a deposit run on banks.
At the start of the 2008, the FDIC insurance fund had $52.2 billion in assets.
Indymac Bank is the largest U.S. bank failure since Jan. 6, 1991, when the Bank of New England, with $22 billion in assets, failed.
Regulators are preparing the institution for future sale, and the FDIC was named conservator of the bank's assets, meaning the collapse of the bank happened so quickly FDIC did not have time to arrange a sale of the bank's assets before closing it.
In a statement, the OTS said:
"The immediate cause of the closing was a deposit run that began and continued after the public release of a June 26 letter to the OTS and the FDIC from Senator Charles Schumer of New York. The letter expressed concerns about IndyMac's viability. In the following 11 business days, depositors withdrew more than $1.3 billion from their accounts."
IndyMac Bancorp Inc. and its subsidiary bank, federally chartered thrift IndyMac Bank, operated a large national mortgage business reliant on low documentation mortgage loans, known as Alt-A mortgages.
IndyMac operated two metro Atlanta operations centers, according to its 2007 annual report: A regional mortgage banking center in Norcross, and subsidiary Financial Freedom's Eastern Operations Center in Atlanta.
It is unclear how many employees will be impacted by the closure in metro Atlanta.
The closure comes on the heels of the bank announcing July 7 it was shuttering much of its lending business and cutting 3,400 of its 7,200 employees.
There are other lenders that I'm pretty certain will meet the same fate as IMB.
Saturday, July 12, 2008:
http://www.bizjournals.com/atlanta/stories/2008/07/07/daily91.html
Feds shuts down IndyMac Bank, two ATL centers impacted
Federal regulators closed Pasadena, Calif.-based Indymac Bank late Friday -- the shuttering of the largest bank nationwide since the Savings & Loan Crisis in 1991, and a move that will affect two Atlanta operations centers.
The closure also marks the second-largest closure of a bank since 1934, according to the Federal Deposit Insurance Corp.
In a unique twist, IndyMac Bank's closure is blamed, in part, by the public disclosure of a letter by U.S. Sen. Charles Schumer (D-N.Y.), expressing concern about the bank's ability to operate going forward.
The bank had $32 billion in assets and $19 billion in deposits, according to the Office of Thrift Supervision and FDIC.
At the time of closing, the bank had roughly $1 billion in uninsured deposits.
The FDIC announced the roughly 10,000 customers with uninsured deposits will receive their deposit amounts.
The FDIC also said it expects the fund to pay between $4 and $8 billion out of its deposit insurance fund, which backstops all U.S. bank deposits to a certain dollar level, in part to stave off a deposit run on banks.
At the start of the 2008, the FDIC insurance fund had $52.2 billion in assets.
Indymac Bank is the largest U.S. bank failure since Jan. 6, 1991, when the Bank of New England, with $22 billion in assets, failed.
Regulators are preparing the institution for future sale, and the FDIC was named conservator of the bank's assets, meaning the collapse of the bank happened so quickly FDIC did not have time to arrange a sale of the bank's assets before closing it.
In a statement, the OTS said:
"The immediate cause of the closing was a deposit run that began and continued after the public release of a June 26 letter to the OTS and the FDIC from Senator Charles Schumer of New York. The letter expressed concerns about IndyMac's viability. In the following 11 business days, depositors withdrew more than $1.3 billion from their accounts."
IndyMac Bancorp Inc. and its subsidiary bank, federally chartered thrift IndyMac Bank, operated a large national mortgage business reliant on low documentation mortgage loans, known as Alt-A mortgages.
IndyMac operated two metro Atlanta operations centers, according to its 2007 annual report: A regional mortgage banking center in Norcross, and subsidiary Financial Freedom's Eastern Operations Center in Atlanta.
It is unclear how many employees will be impacted by the closure in metro Atlanta.
The closure comes on the heels of the bank announcing July 7 it was shuttering much of its lending business and cutting 3,400 of its 7,200 employees.
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