Mortgage Lender IndyMac Seized by the US Government

I was shocked to see news that IndyMac, the holder of the mortgage for my second property (Bowers St), had been seized by US regulators. The mortgage for that property went to foreclosure back in March (my first foreclosure), so needless to say, I contributed to their downfall.

IndyMac's fate was sealed after Senator Charles E. Schumer wrote a letter about the bank. Mr. Schumer spoke strongly about the agency:

“IndyMac’s troubles, like Countrywide’s were caused by practices that began and persisted over the last several years,” he said. “If O.T.S. had done its job as regulator and not let IndyMac’s poor and loose lending practices continue, we wouldn’t be where we are today.”

IndyMac held $32 billion in assets and its demise is being called the biggest failure in 24 years. In addition to loans, IndyMac Bank held one of the largest savings in the country. The FDIC said nearly $1 billion of the $19 billion in deposits held by IndyMac were uninsured, affecting about 10,000 people. When news got out that IndyMac was in trouble, people started taking their money out of their bank accounts, to the tune of $100 million per day. Things like this are exactly why I feel uneasy saving money at all. It feels safer to invest in things that are real, be it a car, motorcycle, boat, education, health, general experience, or yes, even real estate.

Coupled with the craziness that happened to Fannie and Freddie yesterday, the reality of what's happening in the US is finally starting to sink in. Fannie and Freddie, which own or guarantee almost half the $12 trillion of home loans in the U.S., plunged as much as 49 percent and 51 percent yesterday. [1] Think about that for a second: half of all the home loans in the U.S. This happened as investors feared failure in the market would cause the U.S. government to rescue both companies, which would wipe out the shareholders.

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  1. National City Bank is on the top 3 watch list now.

    Feel bad for the 80year old guy with 300k at Indymac; saving it for his grandkids and now it’s goooooone or at least most of it is gone.