IndyMac’s woes are a reflection of the financial industry’s persistent troubles

IndyMac’s woes are a reflection of the financial industry’s persistent troubles from the mortgage meltdown and the resulting credit crisis. Big Wall Street firms continue to record billions of dollars in losses on mortgage-related debt. And the stocks of government-sponsored mortgage giants Fannie Mae and Freddie Mac stocks dropped significantly after an analyst said they could be forced to raise a total of $75 billion in fresh capital.

Of the independent mortgage lenders that have graced the Southern California coastal communities, the few that remain are struggling with rising defaults and shrinking capital are Downey Financial Corp. in Newport Beach and FirstFed Financial Corp in Los Angeles.

IndyMac was started in 1985 by Angelo R. Mozilo and David Loeb, who together had founded Countrywide Financial Corp., and grew to be the second-largest independent mortgage lender after Calabasas-based Countrywide, which was acquired by Bank of America last week.

The Pasadena-based lender had many Mortgage Broker relationships and was the outright leader in “alt-A” mortgages, those made to people with decent credit on terms that fell short of prime mortgage standards. Many borrowers, for example, were allowed to state their income without proof or do what they call ‘NINA loans” ( No Income and No Asset verification). “It’s amazing to me that so many were able to get Million dollar home loans without ANY documentation” what would one expect?
Many of the loans were “pay option” adjustable-rate loans, or “option ARMs,” which allowed a homeowner to pay so little each month that the loan balance grew instead of shrinking. IndyMac also made home-equity loans and sub-prime mortgages — types of loans that have been beaten up badly by defaults. While some were getting 30 year fixed rates below 6.00% some of these lenders figured out how to place good credit borrowers in risky ARM’s paying over 8.00% and differing massive amounts of interest behind the scenes.

Critics contend that IndyMac and other lenders, backed by Wall Street firms that bought loans to create mortgage bonds, brought about their own downfall by encouraging loan agents and independent brokers to promote unconventional financing features to get borrowers into loans they ultimately couldn’t afford and are now facing default or foreclosure if they don’t get help.

It doesn’t seem fair that home loans are developed that cause hard working Americans to lose their homes when they should be able to trust Brokers, Bankers and major Lenders. “We are hoping to create a “win-win”
situation for the lender and borrower and modify these loans, I don’t think the Lenders want to end up in court; nor do the home owners want to lose their home”, says Steven C. Feldman, head Attorney at The Feldman Law Center.

These days most lenders don’t want to talk to clients until they’re defaulting, contrary to what you might here about pressure from the administration to modify these subprime mortgages. We know there’s RESPA and TILA violations in these files even the lender who holds the paper may not be aware of, but if they bought the loan they are responsible for it and should be held accountable. A person should not have to destroy their credit to get their loan modified so they can afford their payment. That’s why we’re taking these cases and helping homeowners get drastic principal and interest rate reductions on these type of loans, say’s Feldman.

If you are in a “Option ARM” home loan with Countrywide Home Loans, Indymac Bank, GMAC, EMC, Wachovia, World Savings Bank, Downey Savings, Home Savings of America, First Federal Bank of California or any other Lender you should get help before your loan recasts or differ any more of your homes equity. Contacting a Attorney to handle your negotiation with the bank is a good idea. The Feldman Law Center is one of a few Law Offices in California that can negotiate home loans in all 50 states. For more information on loan modifications go to www.loanmodificationhelpcenter.org.

The information contained herein is provided for general information and advertising purposes only and is not intended to convey a legal option nor legal advice for any particular case or situation. Nothing in this article shall create an attorney-client relationship. Nothing sent to this law office via e-mail shall constitute an attorney-client relationship. Nothing contained in this article shall be construed to be a guarantee or prediction of result. Prior results are provided for general information purposes only and do not guaranty, warranty or predict a similar outcome with respect to any future matter.   Results achieved depend on individual circumstances and not everyone will qualify or be successful in restructuring their mortgage loan.