Posted by Maranga Ink Resources on 1/4/10 10:32pm
Msg #316654

Indymac/OneWest/Loan Modifications

I found the following article:
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OneWest Bank and its Sweetheart Deal

OneWest Bank was created on Mar 19, 2009 from the assets of Indymac Bank. It was created solely for the purpose of absorbing Indymac Bank.The principle owners of OneWest Bank include Michael Dell and George Soros. (George was a major supporter of Barack Obama and is also notorious for knocking the UK out of the Euro Exchange Rate Mechanism in 1992 by shorting the Pound).

When OneWest took over Indymac, the FDIC and OneWest executed a “Shared-Loss Agreement” covering the sale. This Agreement covered the terms of what the FDIC would reimburse OneWest for any losses from foreclosure on a property. It is at this point that the details get very confusing, so I shall try to simplify the terms. Some of the major details are:

* OneWest would purchase all first mortgages at 70% of the current balance
* OneWest would purchase Line of Equity Loans at 58% of the current balance.
* In the event of foreclosure, the FDIC would cover from 80%-95% of losses, using the original loan amount, and not the current balance.

How does this translate to the “Real World”? Let us take a hypothetical situation. A homeowner has just lost his home in default. OneWest sells the property. Here are the details of the transaction:

* The original loan amount was $500,000. Missed payments and other foreclosure costs bring the amount up to $550,000. At 70%, OneWest bought the loan for $385,000
* The home is located in Stockton, CA, so its current value is likely about $185,000 and OneWest sells the home for that amount. Total loss for OneWest is $200,000. But this is not how FDIC determines the loss.
* ‘FDIC takes the $500,000 and subtracts the $185,000 Purchase Price. Total loss according to the FDIC is $315,000. If the FDIC is covering “ONLY” 80% of the loss, then the FDIC would reimburse OneWest to the tune of $252,000.
* Add the $252,000 to the Purchase Price of $185,000, and you have One West recovering $437,000 for an “investment” of $385,000. Therefore, OneWest makes $52,000 in additional income above the actual Purchase Price loan amount after the FDIC reimbursement.

At this point, it becomes readily apparent why OneWest Bank has no intention of conducting loan modifications. Any modification means that OneWest would lose out on all this additional profit.



Note: It is not readily apparent as to whether this agreement applies to loans that IndyMac made and Securitized but still Services today. However, I believe that the Agreement doesapply to Securitized loans. In that event, OneWest would make even more money through foreclosure because OneWest would keep the “excess” and not pay it to the investor!
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I wish for this starting 2010 will bring more good paid on time assignments.....so far for me, here in TX. 0.

Reply by JanetK_CA on 1/5/10 1:28am
Msg #316662

Please provide a source for this article.

Interesting information, but these days, I try to be very careful about what I believe that I read, since anyone can post anything on the Internet. I'm not saying I don't think this is true because I have no information about it one way or the other, but it's pretty meaningless without a source. And we all tend to judge information based on our perceived credibility of that source.

It's also important to properly attribute information you re-post by giving credit where credit is due. That means providing the name of the author and where it was published. Just for what it's worth...

Reply by James Powell on 1/5/10 7:20am
Msg #316666

Re: Please provide a source for this article.

"For each Shared-Loss Loan in default or for which a default is reasonably foreseeable, the Purchaser shall undertake, or shall use reasonable best efforts to cause third-part servicers to undertake, reasonable and customary loss mitigation efforts in compliance with the Guidelines and Customary Servicing Procedures. The Purchaser shall document its consideration of foreclosure, loan restructuring (if available), charge-off and short-sale (if a short-sale is a viable option and is proposed to the Purchaser) alternatives and shall select the alternative that is reasonably estimated by the Purchaser to result in the least Loss. The Purchaser shall retain all analyses of the considered alternatives and servicing records and allow the Receiver to inspect them upon reasonable notice."

The actual agreement can be found here: http://www.fdic.gov/about/freedom/IndyMacSharedLossAgrmt.pdf

I doubt this agreement is any different from ones made for any other failed institution that has been sold by FDIC to another party.