August 04, 2007

It's getting pretty funny all the crap that comes out on Friday night after market closes. Here's the latest from Alt-A Liar's Loan disaster IndyMac

Nothing will ever beat AHM announcing they weren't paying a dividend (hours before the whole company blew up) at 10pm last Friday night. But here's the latest from "Don't worry - all is well, all is well" IndyMac c/o Blown Mortgage who is all over this mortgage meltdown from the inside...

Bottom line folks - IndyMac in my personal opinion won't be in business in a few more weeks. But regardless of that, what's most important for America is that people who want to buy homes (the few that are left) won't be able to get a loan. Hello Mr. Demand. Meet Mr. Supply. Be sure you talk to Mr. Price.

(and yes, I'm short IMB):

Dear Valued Customer,

In response to recent liquidity issues in the secondary mortgage market, we have found it necessary to revise a number of our program limits and underwriting guidelines. The following revisions became effective for loans that were not rate locked prior to 12:00 p.m. Pacific Time today. The Indymac Lending Guide will be updated to reflect the changes shortly.

Loans affected by the revisions below but rate locked prior to the effective date will be accepted and funded provided all QuickPricer® ratelocks are converted to full e-MITS® submissions by August 10, 2007 and all credit packages are delivered to Indymac by August 17, 2007. In addition, there will be no grace period or “auto-extensions” for clearance of conditions after the rate lock expiration. All loans that were previously delivered and not ratelocked are subject to the revised guidelines.

Program Revisions - Multiple Programs

The following revisions apply to the following programs, where applicable:
• Alt A - Standard Products with loan amounts that exceed the current conforming loan limit
• Alt A - Super Jumbo and Ultra Jumbo Program loans - all loan amounts
• Alt A - Pay Option ARM loans - all loan amounts
• Construction to Permanent Loans with loan amounts that exceed the current conforming
loan limit
• Consumer Residential Lot Loans - all loan amounts
HELOCs - all loan amounts

Documentation Types:

• Stated Income documentation is available only when one or more of the borrowers is
self-employed for loans with the following characteristics:

LTV or CLTV greater than 70% or
• Decision Credit Score is less than 700

Stated Income remains available for borrowers with all types of income when the LTV &
CLTV are less than or equal to 70% and the Decision Credit Score is 700 or greater.

FastForward, No Ratio, NINA, and No Doc documentation types have been eliminated.

Maximum LTV/CLTV: For Alt A - Standard Products, the maximum LTV/CLTV is 95%. For the Lot loan program, the maximum LTV is 80%.

Minimum Decision Credit Score: A minimum Decision Credit Score of 640 is required, unless a higher score is specified in the applicable program limit table.

First Time Homebuyers:

• The maximum LTV/CLTV is 90%
• The minimum Decision Credit Score is 680
• Not eligible for Construction to Permanent loans or Lot loans

Pay Option ARM Products: The following products have been discontinued:

• 12 MAT
• 40 Year 12 MAT
FlexPay 12 MAT 1 Year
• Flex Pay 3/1 LIBOR

The Flex Pay 5/1 & 7/1 LIBOR products remain available.

For further questions, please contact your Indymac Bank sales representative


wawawa said...

Will IMB go bankrupt soon?

I am short on IMB too.

foreclosureboy said...


what is happening to all these 'new technogoly of lending' products ?!?!

what they are scamz?!?! nooooooo

Used to hafta to be a doctor to afford a million dollar home (like 5 years ago!). now janitors and the unemployed and realtors are squatting in them....

gonna have to be a doctor to own one in a year.

jorghis said...

Hmm, well last week it was AHM coming out and saying they were so broke they couldnt afford the seventy cent dividend. This news doesnt look nearly as bad. They are reforming their loan offerings and tightening up on credit. If I were a stockholder in IMB I would be pretty happy to see that.

While it remains to be seen whether or not there will be any serious damage to the company from stated income loans and subprime, this is not bad news. Its just a natural reaction to market conditions. Nobody wants to buy these products on the secondary market so they arent going to produce them anymore.

This event in and of itself means nothing. Wake me up if they suddenly declare that they cant pay a 70 cent dividend and are insolvent.

Anonymous said...

LauraVella said: Why still have all these "modified" sucide loans?

Banking standards were always easy, that is until banks saw a way to get people to sell their souls for a house... either you qualify for a basic adjustable loan, or qualify for a straight 30 year fixed loan-and I dont mean these darn fixed/adjustables.

Banks only two kinds of basic loans... afterall, houses are not investments, they are only places to live.

Homes need to come down 70-85% (no more 50% reduction, lets get real)here in the bay area to be affordable. 28% of income is way too much to spend on a mortgage these days with all the skyrocketing costs of just living...

howd dat happen said...

The innovation and new products were nothing but snake oil. The carnival barkers fooled the regulators, Wall Street Ivy League MBA's and sheep.

zombie said...

Read these new requirements carefully.
It's not "reforming their loan policies" -it's an elimination of 90% of their business over the last four years.
It's like McDonalds saying they're no longer selling beef.

Anonymous said...

"Cracking Down on E-mails", NBC Nightly News Monday. WTF??????????????

Anonymous said...

I LOVE LOVE LOVE seeing these moves toward 30% downpayments!!!!

Now if we could just go a little further.... 50%? 60%? That's what I'm hoping for, a backlash to HUGE downpayments, along with the correspondingly lower market price.

Totally agree with the Anon above- markets all up and down the West Coast need an 80% haircut off the ludicrous prices.

Bring. It. On.

turdly said...

Thank whatever diety you must, but it's about time for normal, and those guidelines are almost normal. This will drive the prices back to 1998 where they should be. If there's no buyers, the prices simply drop like rocks.

I can't wait. I'm as giddy as a sissy on a troop train.

I used to have the extreme pleasure of telling flippers and landlords [way back in 1994] 'I'm sorry but you already have loans on two homes, the banking industry is not interested in helping you amass your little dynasty'. Those were the days. They are coming back.
They are here.

Those of us that weathered the storm are glad to see it. The definitive moment of when things get back to normal is when no lender will accept an appraisal that is not based on the higghest and best use of the property being rental income.

That's how it was when we were all sane.