IndyMac Bancorp Inc., one of the country's 10 largest mortgage lenders, outlined Tuesday a drastic strategic transformation in response to radical changes in the industry and said its loan volume would drop considerably as a result.
At the same time, however, the Pasadena-based savings and loan sent a signal that the market for "jumbo" mortgages -- large loans that are especially common in California and other high-priced states -- might be returning to normal.
IndyMac, the No. 7 mortgage lender in 2006, until this year worked mainly through independent brokers to make loans that government-sponsored mortgage companies Fannie Mae and Freddie Mac wouldn't buy. Some were sub-prime loans to borrowers with poor credit, but most were loans to alt-A customers, a category that in terms of risk lies between prime -- the most creditworthy -- and sub-prime borrowers.
But with investors lacking an appetite for any but the safest mortgage securities, the savings and loan is overhauling its approach by focusing on customers with the best credit and by moving aggressively into the retail market.
IndyMac said Tuesday that it would hire about 800 former employees of American Home Mortgage Investment Co., which has filed for bankruptcy protection, and take over 90 of the lender's direct-to-consumer offices to make prime loans.
Melville, N.Y.-based American Home Mortgage, like IndyMac, had specialized in alt-A loans to people with good credit scores but other issues or undocumented income -- retired couples, property investors, self-employed business owners whose tax returns didn't reflect their available cash. The offices IndyMac is acquiring are mostly in the Western United States.
IndyMac in April acquired many of the retail assets of New York Mortgage Co., another collapsed lender, which operated mainly in the Eastern U.S., and is in the process of buying retail offices from Barrington Capital, a Newport Beach mortgage firm.
When the deals are done, IndyMac said, it would have at least 134 retail lending offices with the equivalent of 1,466 full-time employees, up from nine retail offices with 126 employees.
The lender said Tuesday that 90% of the loans it made from now on would be of the type bought by Fannie Mae and Freddie Mac, which buy nearly all prime mortgages made for less than their $417,000 maximum.
The other 10% of IndyMac's volume is expected to be prime home equity loans and prime jumbo mortgages.
