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Indy Mac Wholesale closes
July 8, 2008
In another sad turn of events for a California home loan lender, Indy Mac has ended all wholesale and most retail operations. Indy Mac was well known for their Alt-A mortgage program (not as risky as subprime) and they attempted to make the switch to an A-paper lender however that did not work.
Adjustable rate mortgages, stated income loans, high LTV loans were things Indy Mac did will in the boom years. Their loan programs were highly sought after for their aggressive nature. California home loans and across the country, Indy Mac was at the top of the list when it came to Alt-A lending. That all ended in 2007.
Like all lenders they attempted to shift from an aggressive Alt-A lender to a conservative A paper lender. This is very difficult to do, especially in a short period of time. Additional problems were created when foreclosure numbers went north. Other lenders that had problems included Wachovia (which purchased Golden West) which was the largest player in the option-arm field. With the switch to A paper loans, Indy Mac attempted to sell these loans to GSE's like Fannie Mae. What they learned was there was very little money in this and the margins were very tight.
Some thought the increase in loan limits might help but that has done very little for their bottom line. They had a ton of mortgage updates over the last few months and many people started to believe this was the beginning of the end for Indy Mac.
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