IndyMac Predicts 2008 Losses

By Matthew Bandyk

Posted: May 12, 2008

One of the nation's biggest mortgage lenders says it will not have a profitable quarter this year. IndyMac Bancorp, based in Los Angeles, reported a $184.2 million loss in the first quarter of the year. One year ago, the company turned a profit of $52.4 million.

Mortgage-based securities and their decline in value made the company unprofitable last quarter. IndyMac also lost money when it had to discontinue all loans by its construction lending division last year as home building dried up. To help turn things around, IndyMac says it will save $7.4 million a quarter by no longer paying dividends on preferred shares of its stock.

bad results

More importantly, Fannie also announced REDUCED dividends for their shareholders. Nice, we're on the hook for a virtually insolvent institution and shareholders are still getting dividends?

Cialis of AL @ Oct 15, 2008 13:50:13 PM

Bad news

The company had forecast a loss of zero to 50 cents a share Sept. 7, but Perry said the earlier expectation was demolished by rising loan delinquencies, credit downgrades of mortgage-backed bonds and widespread belief that home prices would continue to fall.

Cialis of AK @ Oct 15, 2008 13:47:30 PM

Big loss

I think the world has changed a lot in the last two months,” Perry said in an interview, citing the billions of dollars in mortgage-related losses that major Wall Street firms have reported – sub-prime lending catastrophes that cost the chief executives of Citigroup Inc. and Merrill Lynch & Co. their jobs.

IndyMac pegged its third-quarter deficit at $202.7 million, or $2.77 a share, contrasted with a year-earlier profit of $86.2 million, or $1.19.

IndyMac, a top 10 mortgage lender nationally, as recently as the second quarter had been No. 1 in loans to so-called Alt-A borrowers, typically small-business owners with good credit scores who wrote off their expenses so aggressively that their tax returns showed little income.

The lender made mortgages to those customers without documenting their earnings.

IndyMac also was a big player in interest-only loans and “jumbo” mortgages larger than Fannie Mae and Freddie Mac’s $417,000 limit for loan purchases.

june of AL @ Oct 15, 2008 13:45:28 PM

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