As the housing slump rolls on and investors avoid risky mortgages like the plague, IndyMac Bancorp said in an SEC filing today it may swing to a loss in this quarter.
It could lose up to $36.8 million or it may break even in the third quarter — an estimate it described as “rough.”
The Pasadena-based lender said its first goal these days is liquidity and it expects to have operating liquidity of $5.5 billion at the end of the month compared to close to $4 billion over the previous two quarters.
And it restated that is has tightened lending standards by cutting back on simultaneous second mortgages and subprime loans. It’s doing more loans that qualify to be sold to Fannie Mae and Freddie Mac. It also cut costs and has reduced 30-day-plus delinquencies on loans to 3.97 percent from 5.35 percent.
The company said “in a rational, well functioning market” those moves would be enough. “However, in panicked and illiquid markets additional tightening was necessary.”
Among Indymac’s steps:
• Eliminated all subprime loans except those it can sell to Fannie and Freddie
• Eliminated all simultaneous second mortgages and certain other seconds
• Substantially cut other loans it can’t sell to Fannie and Freddie
• Cut back “significantly” on construction loans to home builders
IndyMac is making a presentation to investors today so more news may dribble out from that. But I think the filing covers it. To read the full document, CLICK HERE.
