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FDIC sues O.C. lender over mortgages sold to IndyMac [Updated]

December 29, 2010 |  2:56 pm

The battle over who gets stuck with the tab for millions of soured home loans has produced some eye-popping numbers of late, including Allstate Corp.'s lawsuit seeking to recover losses on $700 million in Countrywide Financial Corp. mortgage-backed securities.

Other claims, including some filed by Uncle Sam, are on the small side. Take, for example, the Federal Deposit Insurance Corp.'s effort to recover damages from an Orange County outfit that sold loans to IndyMac Bank, the Pasadena savings and loan that flamed out in one of the earliest and most spectacular collapses of the mortgage meltdown.

Indymacline The suit, filed Tuesday in U.S. District Court in Los Angeles, involves just six home loans on five properties in Corona, Santa Ana, Adelanto, Murrieta and Ontario. The FDIC, which agreed to shoulder most of IndyMac's losses when it sold the thrift to a group of hedge fund billionaires, did not say how big the loans were.

Its lawsuit seeks unspecified damages from Security Mortgage Funding Corp., a city of Orange mortgage banker that the lawsuit says negligently provided false information when it sold the loans to IndyMac in 2006 and 2007. A voice mail seeking comment from Security Mortgage wasn't returned on Wednesday.

IndyMac, rechristened OneWest Bank by its new owners, was one of the major players in the market for stated-income loans -- mortgages that didn't require borrowers to attach proof that they earned what they claimed they did. The FDIC's lawsuit says the borrowers' incomes were -- you saw this coming -- overstated, along with various other falsifications on the paperwork.

Security Mortgage Funding refused to buy back the loans as required by its agreement with IndyMac, or to reimbuse losses on the loans, the suit alleges.

The action contrasts with higher-profile money hunts by the FDIC, including a $300-million lawsuit filed last July accusing four former IndyMac executives of granting loans to home builders who were unlikely to repay the debts.

An FDIC spokesman declined to make anyone available Wednesday to talk about the Security Mortgage litigation, but agency officials have said previously that they analyze whether they are likely to be able to recover anything before they file lawsuits.

[Updated at 6:57 p.m.: Security Mortgage Funding’s president, Lien Nguyen, declined to comment on the lawsuit, saying he had not seen it.]

-- E. Scott Reckard

 Photo: IndyMac customers lined up outside the Encino branch after the bank failed in July 2008. Credit: Al Seib / Los Angeles Times