Oops,... kkirby. Welcome in the club.
that was about time. I wonder whats on deck. CFC flushed with money to survive, others are less lucky?
We estimate that IMB can currently only achieve 25% of its number of originations; and as those are conforming loans and no whole loans, the volume is even lower.
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IndyMac Alters Product Mix
Friday September 7, 10:26 am ET
IndyMac Moves Toward Originating More Conforming Loans, Will Cut Out Subprime Loans
NEW YORK (AP) -- IndyMac Bancorp Inc. is essentially eliminating all subprime and piggyback loans from its product menu and ramping up its conforming loan business, according to a regulatory filing Friday.
IndyMac will cut out nearly all subprime mortgage production -- loans given to customers with poor credit history. Subprime mortgages are among the worst performing loans. IndyMac has also eliminated all piggyback loans, second mortgages given to customers at the same time they take out a primary mortgage, according to a filing with the Securities and Exchange Commission.
IndyMac expects to originate about $30.91 billion in loans during the second half of 2007, a 36 percent decline from the $48.07 billion originated during the first half of the year as the mortgage market continues to tighten.
IndyMac estimates about 84 percent of its loan production in the fourth quarter will be conforming, or insurable by the Federal Housing Administration. Only about 19 percent of mortgages IndyMac originated in 2006 fell under those categories.
About half of overall production will be alt-A loans that conform to Fannie Mae and Freddie Mac standards. Alt-A loans are mortgages given to customers with minor credit problems or that do not have the documentation of a traditional, prime loan.
Fannie Mae and Freddie Mac are government-sponsored entities, which helps ensure a market for the "conforming" loans they are willing to purchase.
Another quarter of production will be traditional, prime conforming loans, while about 9 percent of production will be reverse mortgages, which are almost all insured by the FHA.
Within the non-conforming portion of loan production in the fourth quarter at IndyMac, about half will be jumbo loans -- mortgages exceeding the size of conforming loans -- which are typically given to customers with strong credit history. The remaining loans will be a mix of consumer construction and lot loans and home equity lines of credit.
As delinquencies and defaults rose on mortgages, investors became increasingly worried about loan performance, leading them to avoid purchasing nearly all mortgages on the secondary market.
Mortgage lenders rely on secondary markets to either sell mortgages or borrow money to make future loans. Without the funding from the capital markets, lenders often have minimal cash to continue operating. Investors have not shied away from purchasing conforming loans though. |
