August 09, 2007

FLASH: Alt-A "Liar's Loan" king IndyMac admits there's no market for Alt-A loans anymore, "market panicking"

Panic? Did I hear that right? Panic?

Hmmm... And when there's "no market" or "no bid" for something, doesn't that mean the value of that something has just plummeted? Mark to Market anyone? Isn't anyone auditing IndyMac?

(note - I'm short IMB and waiting for the traditional closing up shop and mass layoff announcement)

Impac CEO: No bids for Alt-A

Joseph Tomkinson, head of Impac Mortgage Holdings in Irvine, said his company had to abandon Alt-A loans, which has been its focus since its founding in 1995, because there is no market for the loans right now.

“Right now there is no bid for it,” Tomkinson said. “There should be a bid, but there is no bid. People are taking a breather to see where the market is going. You have a market that is just panicking.”

Impac will switch gears dramatically and try and sell loans to Fannie Mae and Freddie Mac. It used to sell a lot of loans to Fannie but stopped amid intense competition, Tomkinson said. The REIT has to go back to Fannie and Freddie because they’re the only ones buying, he said.

14 comments:

keith said...

And this over at blownmortgage.com:

IndyMac Lets You In on How Bad the Market has Become
August 8th, 2007
This is from an email communication to brokers regarding IndyMac’s new rate lock policy.

For those unfamiliar with the term: a rate lock is a commitment by the lender to fund (or purchase) the originated loans at the terms agreed to in the lock. Usually locks can be extended for a small fee if they expire. Locks can be on a short-term 12 or 15 day lock or longer term locks ranging from 30-90 days. The longer the lock the more costly.

_____________
From IndyMac:

For any type of ratelock extension through e-MITS or the Ratelock Desk, loans will be
subject to an extension fee of 10 points.
______________


Folks, don’t miss that last bullet. You read it right. An extension fee of 10 points. If you don’t fund one of your pay-option, or short-term ARM or closed-end second loans by your lock expiration that loan is dead. On a $100,000 loan 10 points is $10,000.

Right there in plain dollars and sense is how bad the market for those crap loans has become. Alt-A pay option ARMs, short-term ARMs and second mortgages have become the lepers of the mortgage community. Investors won’t take them and now IndyMac and others are just praying that your lock will expire before you fund and they have to eat it at a loss or hold garbage on their books. Either way it hurts their liquidity.

I wonder if there are some internal directives being handed down to drag out the processing of files close to lock expiration? You know - help kill a few toxic loans before the house gets stuck with them?

Consumers: if you are banking (no pun) on having your loan fund (and it is of one of the above flavors) you need to be aggressive in ensuring that it funds before your lock expiration. Otherwise, you are going to be back at square one with financing options that will look pretty God-awful compared to what you are currently locked-in at.

Anonymous said...

there should be a bid, but they don't want to insult the seller

Anonymous said...

BNP suspends funds after subprime shock
By Reuters, August
French bank BNP Paribas has suspended three of its funds on Thursday as problems in the US subprime mortgage sector are preventing it from calculating their value.

pwnd

Anonymous said...

So if they had to sell the loans on their books today there would be no buyers?

This POS is worthless

Anonymous said...

TILT!

Anonymous said...

Alt-A Mortgage Loan Trouble Will Negatively Impact Sales and Home Values

Alt-A mortgages made it easy for borrowers to get into the market, and helped to propel home prices during the boom. Now these loans are threatening to negatively impact real estate sales and home values.


Alt-A Mortgage Statistics


$400 billion worth of Alt-A mortgages were packaged into bonds in 2006
10 percent of the Alt-A loans packed in 2006 shared subprime characteristics
$200 billion of the $700 billion in curret outstanding Alt-A mortgages are backed by option ARM bonds
Alt-A loans account for 25 to 50 percent of Moody's recently increased loss projections

Source: Moody's

Alt-A mortgages are a step above risky subprime loans, and a step below the prime loans given to borrowers with the best credit. Such loans are typically given to people who are seeking to finance investment properties and to people who want to qualify for a loan without having to prove their income. Alt-A loans have been given the nickname 'liars loans' because many borrows lie on their application in order to qualify. Analysts at Credit Suisse Group estimate that 60 percent of liar loan applicants exaggerate their income.


The Downfall of the Alt-A Sector

Michael Youngblood, a top mortgage-bond analyst with Friedman Billings Ramsey Group Inc., recently wrote in a report that 'liberal underwriting was not limited to subprime loans', and for this reason alone, default rates for non-subprime mortgages will increase significantly in 2008.

Youngblood singled out Alt-A mortgage loans and jumbo mortgage loans in particular, and said he expected defaults and foreclosures to rise considerably in 2007 and 2008.





http://efinancedirectory.com/articles/Alt-A_Mortgage_Loan_Trouble_Will_Negatively_Impact_Sales_and_Home_Values.html

Anonymous said...

Impac = IndyMac
One of us is not understanding.

Anonymous said...

"taking a breather"

yeah, sure.

When they had bank holidays in the '30s, did they tell the public those were breathers too?

Anonymous said...

Just to be clear, Impact is NOT IndyMac. Two completely separate companies peddling the same crappy Alt-A loans. But they are NOT the same organization.

Anonymous said...

“Right now there is no bid for it,” Tomkinson said. “There should be a bid, but there is no bid. People are taking a breather to see where the market is going. You have a market that is just panicking.”

Bullshit. The market place is absorbing the rate of default on these idiot loans and making the determination that it has had enough drama for now (and probably for quite some time to come). This is the market place experiencing serious buyer's remorse for having loaded up on these bullshit loans for too long and coming to the realization that the underlying asset securing these bullshit contracts is either stagnating in value or falling in value. This guy is tits up and he knows it but you know what they say about too much reality.

Smug Bastard

anonymous wimp said...

So is this like Ford Motor company saying, "Well, this whole SUV and pickup truck thing didn't work out, so now we're going to focus on sedans..............and by the way, we haven't had a successful sedan line in 5 or ten years......"???

HauspocalypseNow said...

Alt-A was only subprime with lipstick.

No one verified assets or income so you musta been an idiot to be subprime or alt-a

bad credit but no job/low income=alt a

really bad credit w/no job/low income = subprime

Nemo said...

Impac (an mREIT) is not IndyMac (a thrift), idiot.

berto xxx said...

The market place is absorbing the rate of default on these idiot loans and making the determination that it has had enough drama for now (and probably for quite some time to come). This is the market place experiencing serious buyer's remorse for having loaded up on these bullshit loans for too long and coming to the realization that the underlying asset securing these bullshit contracts is either stagnating in value or falling in value.