Often lending to borrowers who didn’t documents their incomes, IndyMac grew its workforce to more than 10,000 and was the second-largest independent mortgage company before it began cutting back in late 2006 amid early rumblings of the avalanche of defaults that has buried the business.
IndyMac Chief Executive Michael W. Perry said attempts to work with investment bankers to raise capital, announced in March, had been unsuccessful. IndyMac shares, which traded above $30 last July, closed at 71 cents Monday, up 4 cents. IndyMac will have just 3,400 workers when it is through shutting nine regional loan offices, including four in California, that made loans through independent brokers, and about 150 direct-to-customer retail offices in the West and Northeast. Remaining employees will include about 1,100 loan-servicing employees handling billing, collections and foreclosures from Kalamazoo, Mich., and Austin, Texas. Financial Freedom, a reverse mortgage unit operating mainly from Irvine, Sacramento, and Atlanta, will continue to employ about 800, IndyMac said, while 400 more will stay on with the company’s Southern California retail and Internet banking operations. In addition, 500 employees will remain in portfolio management and administration, largely in Pasadena.
IndyMac was started by Countrywide Financial Corp. founders Angelo Mozilo and David Loeb in 1985. IndyMac is one of the last of such “monoline” home lenders, companies that once dotted Southern California, including a host of sub-prime lenders such as Ameriquest, Argent and Option One in Orange County, and Fremont, Aames and Ownit in Los Angeles County.
The few remaining Southern California mortgage specialists in business are struggling under rising defaults and shrinking capital cushions against loss, including Downey Financial Corp. in Newport Beach and FirstFed Financial Corp. near Playa Vista.
IndyMac specialized in so-called alt-A mortgages, which were made to people with decent credit but on terms that prevented them from being treated as prime loans.
