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Paul Kiesel
Paul Kiesel
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IndyMac may be the Next Mortgage Lender on the Brink of Failure

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U.S. Senator Charles Schumer asked U.S. regulators to analyze the financial health of Indymac, as Schumer believes the company may be on the brink of failure. The FDIC, the Office of Thrift Supervision, the Federal Housing Finance Board and the Federal Home Loan Bank of San Francisco all received letters from Sen. Schumer that express his views that IndyMac is having “serious problems.”

According to the Los Angeles Times, Sen. Schumer wrote in the letter that he is, “concerned that IndyMac’s financial deterioration poses significant risks to both taxpayers and borrowers [. . .] the bank could face a failure if prescriptive measures are not taken quickly.”

Indymac was the largest Alt-A lender in the nation, as the company signed up many borrowers who were just short of qualifying for prime mortgages. Indymac’s value has decreased 97% over the past year, and is currently trading at just over $1 a share.

It appears IndyMac will have to raise capital and have to raise it fast, as the company has reported that it’s lost over $900 million in the past three quarters, and has likely omitted some dividends and said that it won’t make money this year. I’d look out for another government bailout package, as long as another bank comes to the table and is willing to acquire IndyMac in the same fashion JP Morgan Chase did with Bear Stearns.