IndyMac in deep trouble indeed, at $.62/share

Shares of Pasadena-based IndyMac slipped by 19 cents today, which would be no big deal for most stocks. But IndyMac is a penny stock these days, so a loss of less than two dimes a share wiped out roughly a quarter of its value. It closed at 62 cents a share.

Over at Money & Co., Tom Petruno details the near-run on the bank Friday and Saturday, as investors lined up to pull their money out of the bank, which has been battered to the brink of survival by bad loans. As Petruno explains, Sen. Charles Schumer (D-N.Y.) didn't do IndyMac any favors when he wrote to federal regulators saying he was "concerned that IndyMac’s financial deterioration poses significant risks to both taxpayers and borrowers."

Over at LA Biz Observed, Mark Lacter notes that IndyMac is about to become America's largest independent mortgage company, -- if it survives the next few days. "A new report by the Center for Responsible Lending finds that IndyMac engaged in the now-familiar pattern of loosey-goosey lending practices that fueled the mortgage boom. The nonprofit organization says it interviewed former employees who spoke of the pressure to cut deals with little regard for their customers' ability to repay the loans."

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo Credit: Bloomberg News 

Comments

[Mark_Pasadena]

Schwab's Sonders says what we've all been saying on this blog: "There's a lot of focus on the recklessness of lenders, but there's very little focus on the recklessness of buyers. My attitude is we need to flush this system out as oppossed to trying to elongate a process in my mind that to some degree is inevitable."

Watch the entire interview at Yahoo Tech Ticker "Bottomless Home Prices to Fall Another 10-15 Percent, Says Schwab's Sonders": http://tinyurl.com/3fjfjl

[What A Legacy]

Indymac was founded by Mozilo's orginal CW partner.

[I live in LA, too]

Yes, and Mike Perry was hand-picked by Angelo himself.

[Laker]

I have money in money market at Indymac to the tunes of $100,000.
I'm under FDIC limits, so, I'm waiting for FDIC to pay me next day...or have somebody else take over the bank....
At least I'm getting top interest rate....

[Nelcisco]

Great!!!!!!!

I just put in a loan through Indymac

[la voce bella]

My loan was just sold to IndyMac -- will I be paying my mortgage to an entity that is going out of business? Will they sell my loan to someone else? Does anyone know how this sort of thing works? Many thanks...

[Fred]

Maybe a further 15% drop is all there's going to be nationwide. But there will be at least another 30% drop in L.A. That would put us back to the 5x historical price-to-income ratio. The median price is now $429,000. It 's going to $300,000. That's 30%. Now, every economic indicator from the last month points to an even deeper decline, a real overshoot, so the bottom is anyone's guess. But the fundamentals won't support anything above $300,000.

[E]

"A new report by the Center for Responsible Lending finds that IndyMac engaged in the now-familiar pattern of loosey-goosey lending practices that fueled the mortgage boom."

You don't say.

It had been known for well over 18 months with the bubble bloggers. Just search HousingPANIC for Indymac.

Everything seems to "surprise" everybody when something bad turns up.

Center For Responsible Lending?

How about Center for See No Evil, Hear No Evil, Speak No Evil.

[save your ammo]

Laker:

I don't think the FDIC will have your MMkt cash for you
the next day if IndyMac closes for lack of a buyer.

I understand you will lose all interest not already
credited since the last interest payment... and you
receive no further interest on the money regardless
of how long it takes the FDIC to get you your
insured deposit back. Which is why IndyMac offered
higher than average rates. Not so simple.

[Nick]

For home loans owned by IndyMac, they will be transferred as assets to whatever entity gets the assets from IndyMac's dissolution (in whatever form it comes), and you'll pay the new entity under the previous loan terms. The new loan holder should notify you as IndyMac presumably did in the event of another transfer. I suspect we'll see a lot of transfers and lenders start to go under in mass...

[Danny S]

Wow! IMB offered me a marketing job in early 2004, but changed their mind two days before I was supposed to start. So I took a job with an oil company instead. Dad was right - it's better to be lucky than smart! :)

[JBA12621]

I just got a call for an interview for a job in the "risk managment" department for indymac. I don't think I'll be going to that interview. I was already laid off from a company due to closing and don't think another one would look to good.....

[Laker]

I've heard today (WSJ.com) that Wachovia is now canceling all fees on prepayment penalties for Option Arms - pick a payment ARMS.
That is so funny.....
You see, back in the heydays of 2005-2007, all these lenders put extremly high prepayment penalties so that you would get stuck with the option ARM...when it recasts or resets and would basically make it hard for you to refinance to a better loan once the teaser/minimum payment cannot continue....

Today, they are canceling that, basically begging the loan owners to refinance so that they could get their money back...(paid off loan)
Any option arm paid off loan is most likely a loser, as the banks were planning for them to lock the borrowers AFTER they recast...then collect very high payments...
Now, they know that probably 99% of the option ARMS are doomed to default and foreclosure, then since most were 80/20 loans, they could, if lucky, get back 50 cents on the dollar....
I think the Option ARM lenders like Wachovia, CW, Wells Fargo, etc should actually pay the loan owners to refinance , that is pay them $10,000, 20,000 or $50,000 just to give them incentive to refinance and not to default.....
That is crazy but funny!

[Maggie Knowles]

The reckless borrowers couldn't have happened without the big push from Wall St. pressuring lenders to create risky loan products. If the risky loan products were not available in the first place, we wouldn't be having this conversation. End of story.

[Maggie Knowles]

I think I found the link to this report on Calculated Risk.
http://tinyurl.com/4yrbup

From the Center for Responsible Lending (CRL):

In Brief: IndyMac’s story offers a body of evidence that discredits the notion that the mortgage crisis was caused by rogue brokers or by borrowers who lied to bankroll the purchase of bigger homes or investment properties. CRL’s investigation indicates many of the problems at IndyMac were spawned by top-down pressures that valued short-term growth over protecting borrowers and shareholders’ interests over the long haul.
“…I would reject a loan and the insanity would begin. It would go to upper management and the next thing you know it’s going to closing.”
—Audrey Streater, former Indymac underwriting team leader in an interview with CRL.

[Giacomo]

I see where trading has been suspended on IndyMac shares, but no mention of this in the MSM? Hhmmmmm....

[Eckalectic]

Look who is offering the highest 6-month CD rates?

http://bankrate.com/brm/rate/high_ratehome.asp?
web=brm&prodtype=invest&product=14&sort=3

IndyMac 3.92%

Check out that list of banks for an idea of the next shoe(s) to drop.

[jag]

I recommend if you have a CD/s with IndyMac that you take your money and run with it. I have a CD myself and I called IndyMac this morning and they have not return my call yet. Not a good sign if you ask me. I'm sure they are getting a lot of calls. I may have to pay a penalty, but I rather pay that than to have to deal with the FDIC. It is my understanding that the FDIC may take up to two years to give you your own money back with no interest earned. SCARY STUFF!

[Former IMB]

IMB is a joke. Their value is where it should be and Schumer was right to alert the General Public and FDIC regarding this bank. The loans they have made over the last 3 years were liar loans, and neg ams. There are more losses to come, and no capital. IF anyone wanted this POS a deal would have been made for the pennies it is now trading at. It will never return to profitability. Take Schumer concerns seriously and move out. How do you expect the CEO to respond? Schumer is right? Please, he has been living in fantasy land smelling his farts for too long.

[SP]

Mike Perry's biggest mistake was being overly confident in many of the dumb-ass, unqualified executives working for him at Indymac.

Specifically, Indymac is primarily being brought down by fraudsters who made money by duping unsuspecting lenders into over lending on properties and disappearing with the excess proceeds.

Just research the public records for Indymac's REO listings in Atlanta, Detroit, Columbus, Chicago, etc and you will find property after property that was acquired one month at one price and three to six months later, Indymac was tricked into making 100% LTV purchase loans at several multiples of the recent previous sale price.

For example, a current Indymac REO listing at 232 Anderson St in Atlanta's ghetto that sold in Dec '05 for 65K then resold three months later for 150K with Indymac financing the inflated purchase price. This lovely home is now in Indymac's portfolio of real estate owned with an asking price of $17,900 (18K)! (paste link below to see picture of this property)

http://apps.indymacbank.com/individuals/realestate/
showThisOne.asp?REONO=1007381344&state=GA&
Active=YES

Due to Indymac's oblivious executives's ignorance and naivety, fraudsters quickly realized that ripping off Indymac was like taking candy from a baby, and fraudulent after fraudulent transaction ensued.

It is so sad as at one point, Indymac was such a great , trend-setting company that other lenders aspired to be like.

[Giacomo]

The CFO of IndyMac resigned yesterday. I see this morning that trading in IMB has been halted again.

Why is this not a bigger story? Is there some sort of "gag" rule in effect? I guess we will know later.

We had all the proceeds from our house sale in an IndyMac account 2 years ago. The whole family thought I was being paranoid when I insisted in getting out of there, and putting the money into separate, smaller (FDIC-insured) accounts at different banks. It doesn't seem so silly now, eh?

[Worried]

I just took all my deposits out from IndyMac Bank. It's around noon time and the clerk told me they had already out of cash. He could only offer me $500 cash and the rest of the balance will be in casher's check. Duh!

A male customer standing in the next window was also withdrawing all his money out and the clerk was calculating the penalty for him. We looked at each other with a "I know what you are doing because I am doing the same thing" smile.

I know the money is FDIC insured but I just don't want that hassle! I just hope IndyMac can last at least till I get my money in another bank!

[jag]

Took all my money out as well. I paid a penalty, but like Worried mentioned I don't want to deal with the FDIC.
Pete, would you post the latest about IndyMac? I understand their CFO resigned yesterday. I would like to know if they will be delcaring bankruptcy or who knows what.

[m.frank]

my husband has been on hold for hours trying to transfer our savings out of the money market at IMB. It is an absolute nightmare...I finally got through and couldn't understand a word the lady was saying because of the connection. NEVER AGAIN...I'd rather keep the money in a sock drawer then deal with this nightmare again.

[Franklin Adams]

I Like to know were the other 90 banks that are in trouble? And who are they? Were ar they located?