Complain about a product or service

Feds Seize Mortgage Lender IndyMac

FDIC takes over as IndyMac becomes the second-largest bank failure in history

July 11, 2008

The agency said it will transfer insured deposits and substantially all the assets of the Pasadena, California bank to IndyMac Federal Bank, FSB. Brokered deposits will be held by the FDIC and those insured deposits will be paid off when the insurance determination is complete.

Under federal law, individual deposits are insured up to $100,000 $100,000 per depositor plus $250,000 per retirement account.

At the time of its seizure, IndyMac had total assets of $32.01 billion and total deposits of $19.06 billion as of March 31, 2008.

As conservator, the FDIC said it will operate IndyMac Federal Bank, FSB to maximize the value of the institution for a future sale and to maintain banking services in the communities formerly served by IndyMac Bank, F.S.B.

Insured depositors and borrowers will automatically become customers of IndyMac Federal, FSB and will continue to have uninterrupted customer service and access to their funds by ATM, debit cards and writing checks in the same manner as before, the agency said.

However, IndyMac depositors will have no access to on-line and phone banking services this weekend. These services will be operational again on Monday. Loan customers should continue making loan payments as usual, FDIC said in a statement.

Quick collapse

CEO Michael W. Perry said the company was struggling with “the continuing erosion of the housing and mortgage markets.”

It's one of the latest aftershocks of the meltdown of the mortgage market. The stocks of Fannie Mae and Freddie Mac, the huge government-sponsored entities that buy much of the “paper” in the mortgage industry, sank yesterday after a warning that they could need to raise as much as $75 billion in new capital.

IndyMac was founded in 1985 and became the leader in “alt-A” mortgages, those written to consumers whose credit was good if not outstanding, on terms that included adjustable interest rates, flexible pay plans and other features that often meant consumers' loan balances grew instead of declining over time.

The company was also heavily into subprime and home-equity loans and often required little or no documentation of borrowers' income, critics said.

The Center for Responsible Lending, a consumer advocacy organization, said IndyMac's decline was caused by “unsound and abusive lending” practices.

Report Your Experience
If you've had a bad experience -- or a good one -- with a consumer product or service, we'd like to hear about it. All complaints are reviewed by class action attorneys and are considered for publication on our site. Knowledge is power! Help spread the word. File your consumer report now.

Back to the top |