IndyMac Stops Making Mortgage Loans

By
Real Estate Agent with Lyon Real Estate BRE #00697006

house sitting on a pile of moneyIf you're a seller who is having problems negotiating a short sale or obtaining debt relief at IndyMac, consider the fact that IndyMac today says it is closing its mortgage business and laying off 3,800 employees, which is more than half of its workforce.

This means effective immediately it will make no new mortgage loans. IndyMac says it will honor its existing loan applications that have a locked-in interest rate, but borrowers who are relying on the lender to perform and fund pending loans might be feeling a little nervous these days. Those who haven't locked a rate are flat out of luck.

The bank has been struggling throughout this subprime upheavel, experiencing shrinking assets and regulatory pressures.

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Elizabeth Weintraub is an author, home buying expert for About.com, a Land Park resident, and a veteran real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown and East Sacramento, as well as tract homes in Elk Grove, Natomas, Roseville and Lincoln. Weintraub is also a Sacramento Short Sale agent who lists and successfully sells short sales throughout the four-county Sacramento area with an emphasis on Elk Grove. Call Elizabeth Weintraub at 916.233.6759. Put 40 years of real estate experience to work for you. Broker-Associate at Lyon Real Estate. BRE License # 00697006.

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Photo: Unless otherwise noted in this blog, the photo is copyrighted by Big Stock Photo and used with permission.The views expressed herein are Weintraub's personal views and do not reflect the views of Lyon Real Estate. Disclaimer: If this post contains a listing, information is deemed reliable as of the date it was written. After that date, the listing may be sold, listed by another brokerage, canceled, pending or taken temporarily off the market, and the price could change without notice; it could blow up, explode or vanish. To find out the present status of any listing, please go to elizabethweintraub.com.

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Show All Comments
Rainmaker
142,385
Cristal Drake
Prudential California Realty - Fullerton, CA
Realtor - Fullerton Real Estate

I hadn't heard this yet.  Thanks for the heads up!  Yikes!

Jul 07, 2008 11:23 PM #11
Rainer
64,800
Dan Coleman
Associate Broker, Silverhawk Realty - Ontario, OR

Elizabeth, thanks for the heads up.

I showed a home today, a short sale listing, with an Indymac loan.  The buyers want to make an offer.  I am wondering what this will do to the acceptance process.

Jul 07, 2008 11:55 PM #12
Rainmaker
355,436
Lori Mode
Keller Williams Realty - Elk Grove, CA Homes for Sale - Elk Grove, CA
Mode and Durham, Your Elk Grove Real Estate team

Elizabeth - I was told today by my IndyMac loan officer...we have a few loans in progress and it's hard to believe that these loans are going to fund.  I think I need to start working on a Plan B for these loans tomorrow.  I was told that IndyMac is being purchased and it's the new lender that will be funding these loans.  I guess we all have to wait and see.

Jul 08, 2008 12:29 AM #13
Rainmaker
1,213,222
Elizabeth Weintraub Sacramento Real Estate Agent, Top 1% of Lyon Agents
Lyon Real Estate - Sacramento, CA
Put 40 years of experience to work for you

Hi Cristal: It's like every time we turn around, there's some other crisis. But it keeps life interesting.

Hi Dan: I'd imagine that IndyMac would be more anxious to get rid of that short sale but as another poster once pointed out, the larger number of approved short sales in a lender's portfolio, the lower the assets.

Hi Lori: It's always good to have a Plan B. And a Plan C and a Plan D. One of my favorite restaurants in Sacramento is called Plan B. That's because the owner didn't have one. Fortunately, he didn't need it.

elizabeth weintraub sacramento real estate agent

Jul 08, 2008 10:09 AM #14
Rainer
40,775
Carolyn Gjerde-Tu-Davis
Lyon Real Estate - Davis, CA
Ca Real Estate

I have a buyer in the contract writing stages approved with IndyMac. (Meaning she is looking at bank owned properties and involved in multiple offers).  My hope is that my buyer's loan rep will move to another company or this buyout will allow her to move forward.  (buyer was a referral from this loan rep.)

Jul 09, 2008 03:07 PM #15
Rainmaker
1,213,222
Elizabeth Weintraub Sacramento Real Estate Agent, Top 1% of Lyon Agents
Lyon Real Estate - Sacramento, CA
Put 40 years of experience to work for you

Hi Carolyn: I hope it works out for you, too. But if I were you, I'd have a Plan B. You know, just in case. :)

   elizabeth weintraub sacramento real estate agent

Jul 10, 2008 12:06 AM #16
Anonymous
Anonymous
Anonymous

According to members of my broker discussion board, IndyMac has completely folded on loans in process.  Anyone in their pipeline, locked or not, must now seek loans elsewhere.

Jul 10, 2008 12:14 AM #17
Rainmaker
1,213,222
Elizabeth Weintraub Sacramento Real Estate Agent, Top 1% of Lyon Agents
Lyon Real Estate - Sacramento, CA
Put 40 years of experience to work for you

Nor surprising, Catherine. Thanks for the update.

elizabeth weintraub sacramento real estate agent

Jul 10, 2008 12:16 AM #18
Anonymous
Anonymous
Anonymous

Here's a comment from one hapless broker:

IndyMac unable to fund closed loans

We have learned that IndyMac is using a slippery technique to NOT fund loans already closed.  They add a condition prior to funding, CONDITION 80, which is a 3rd party, outside vendor to QC files before funding.  They say this will take 5 days from yesterday. Very sneaky timing.  Since they have already stated that any locks past tomorrow, July 10th, will require a 1% lock fee up front, this effectively kills any loans waiting to be funded.  I think we all understand that institutions can go belly up, and we have the politicians, (Charles Schumer D, NY) to thank for leaking a memo to the WSJ that IndyMac Bank was becoming unstable last week, which caused the $100m run on deposits at IndyMac Bank FSB.  BUT.. it is this political "grandstanding" that is causing many more poblems than existed prior.  If the memo had not been leaked, I suspect that IndyMac could have made an orderly withdrawal from the market and not let 100's of loans waiting to be funded just die on the vine. They could at least have stopped the closings, rather than let Borrowers waste their time at a closing table.  I think IndyMac also bears much responsibility this past 2 days for not being upfront about CONDITION 80, which is nothing more than a smokescreen.

 

Jul 10, 2008 12:43 AM #19
Rainmaker
1,213,222
Elizabeth Weintraub Sacramento Real Estate Agent, Top 1% of Lyon Agents
Lyon Real Estate - Sacramento, CA
Put 40 years of experience to work for you

Thank you, Catherine. With all the lenders in the marketplace, why wouldn't a buyer jump ship rather than take a chance that the loan won't fund? I've pulled buyers out of loans and they've closed within a week at the new lender. Is it because IndyMac won't release the file?

elizabeth weintraub sacramento real estate agent

Jul 10, 2008 11:06 AM #20
Anonymous
Anonymous
Anonymous

IndyMac MUST release the loan.  In fact, there are posts galore on the broker discussion board from account execs at other lenders offering expedited processing to close their stricken IndyMac loans.

Jul 10, 2008 11:43 AM #21
Anonymous
Anonymous
Gina

I put an offer on a home with Indymac. The property is a short sale.  I've been waiting for the past 6 weeks for a response from the bank.  I know that they ordered a BPO last week.  What happens now that the Feds took over?  Can anyone please shed some light.....Do I still have a chance of getting that property???? Anyone familiar with the topic, please reply.

Jul 12, 2008 07:41 PM #22
Rainmaker
1,213,222
Elizabeth Weintraub Sacramento Real Estate Agent, Top 1% of Lyon Agents
Lyon Real Estate - Sacramento, CA
Put 40 years of experience to work for you

If I had to venture a guess, Gina, I'd say the bank still needs to dump its non-performing inventory but the process may take longer now. Hopefully, Catherine will jump in with a tip.

Jul 13, 2008 09:57 AM #23
Anonymous
Anonymous
Anonymous

Gina, IndyMac is the first to fall into regulatory hands--it's a depository institution (like Bank of America) in addition to being a lender--so I can't really say how that will impact its portfolio of defaulting loans.  If anything, I think IndyMac's failure will bode well for you; that is, you may be able to offer them even less now!  Why not call the Loss Mitigation Dept. and ask them frankly, "Should I bail--(no pun intended)--on this property or hang in there while you guys get taken over?" Monday may be too soon to ask this question but, shortly, they should have an idea how the takeover impacts their discharge of defaulted loans.

There's another lender out there who's feuding with Fannie Mae regarding buy-back agreements.  They were out of the short sale game but only briefly. Lenders simply cannot have these loans on their books for long.  Unless reserve requirements get modified, the longer that banks carry defaulted loans, the more likely it is that they, too, will get taken over. 

Clear as mud, huh?

Jul 13, 2008 02:25 PM #24
Anonymous
Anonymous
Gina

Thank you, Catherine and Elizabeth for responding.  I think I'll hang in there, wait and see what will happen.  I'm not ina hurry and IF I do get that property for the price I offered, I'll be very, very happy!!!!!

Jul 15, 2008 04:42 PM #25
Ambassador
567,298
C Tann-Starr
Tann Starr & Associates, Inc. - Flushing, NY

This drama is the perfect illustration of "unintended consequences" when the government insists lending institutions must fund particular types of projects, only to back peddle later and claim "they" should not have funded it "that particular way."

Jul 15, 2008 04:52 PM #26
Anonymous
Anonymous
Anonymous

If, C Tann, you're talking about CRA (Community Redevelopment Act) loans, there's no indication that they're defaulting any deeper than any other type of loan.  Probably the only type of loans still performing well are conforming 30 year FRM to prime borrowers.

 

Jul 16, 2008 04:23 AM #27
Anonymous
Anonymous
Chip Harris

I had a refinance that closed on July 1st and was supposed to fund on July 7th.  Indymac refused to fund the loan, stating that they discovered in a prefunding audit that the "collateral value was not adequate."  This is of course complete bs, because the file had been cleared to close, docs were sent out, and the appraisal was approved.  Does anyone know if my borrower has any recourse?  Rates have gotten worse, so it's not as simple as moving the loan to another lender.

Jul 16, 2008 03:40 PM #28
Anonymous
Anonymous
Anonymous

When Capitol Commerce, a regional lender, folded a few years ago, I had several loans in their pipeline.  Naturally, rates worsened post-implosion.  I paid $10K out of my own pocket to take the loans out of Capitol Commerce's pipeline and lock the loans at another lender at the same interest rate.  It's just something you gotta do sometimes to maintain your own credibility.

You could set the loan up at another lender and float until rates get better or bite the bullet now.  That's about all you can do.

Jul 16, 2008 04:00 PM #29
Anonymous
Anonymous
EDNA JACKSON

This is sad how people got long shark with these greedy lenders and realestate agency. If your credit is not shot, I have some good news where all other lender's failed, my lender never did anything wrong!  With my loan I have 3 1/2 years on my loan to go and people in my subdivison have 19 years on their loan.  It took me from a 30 year fixed with 28 years to go and I  qualifed for a 10 year loan. I got so excited I joined the company and became a mortgage broker in the state of Georgia.

 

edna_c_2002@yahoo.com

Sep 22, 2008 03:44 PM #30
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Rainmaker
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