IndyMac In Trouble — Along With Other Mortgage Lenders
One of the signs that the subprime mortgage crisis is still very much affecting the economy and the financial markets is the continued issues that mortgage lenders are having. Among the latest to experience difficulties is IndyMac.
IndyMac has been halting trading, and the company is going to pretty much shut down its home mortgage loan origination business. For the most part, IndyMac focused on Alt-A loans. Alt-A loans are just starting to go the way subprime mortgage loans did last year. National Mortgage News reports on the IndyMac story:
IndyMac said as of July 7 it would no longer accept any new loan submissions or rate locks in its retail and wholesale forward mortgage lending channels, except for its servicing retention channel, and would cut roughly half its staff of 7,200 over the next couple of months. The company said it plans to honor all its existing rate-locked loans and continue to fund them
Other mortgage lenders are having problems as well. Reports of larger than expected losses by government charted mortgage lenders Fannie Mae and Freddie Mac are creating concerns that a great deal of capital will be needed in order to offset losses. Both Fannie Mae and Freddie Mac lost a great deal of value in their stock prices.
The fact that both of these government chartered organizations will be expected to take on more casualties of the subprime mortgage mess (due to the fact that they can now accept loans that were once unacceptable for a government charter) will not likely help much in the coming days and weeks.
Even though some are saying that the economy is on the road to recovery, it appears that mortgage lenders still aren’t. And the continued issues in the financial sector mean that decreased liquidity will be the norm across other financial and credit markets.
Tags: Fannie Mae, Freddie Mac, home mortgage loan, IndyMac,
subprime mortgage, mortgage lenders, Alt-A loans
