The Pasadena-based lender racked up more than $200 million in losses during the third quarter, five times as much as it had predicted in September. It was the company’s first quarterly loss in nearly a decade.
IndyMac Chief Executive Michael Perry blamed house flippers for most of the losses. Many of these speculators bought properties with little or no money down, often using a “piggyback” loan to cover the down payment, Perry said.
Now with home values falling and with little or no money at stake, these borrowers are defaulting on their mortgages, Perry said. “A lot of speculators crept into the market — people who lied about their intent to live in their homes,” he said.
The upside, he added, is that these loans quickly went bad and the downturn in housing has now chased away the would-be opportunists, so that problem should subside. IndyMac slashed its quarterly dividend by 50% to 25 cents, and Perry said further reductions were likely if losses continued.
I love it – its not our fault that we were greedy and didn’t check documentation and loaned whatever to whoever to make those big fees. Those borrowers just lied to us. Please help bail us out.
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