When the government leaves and Wall Street takes over, we have Main Street problems. Haven’t we already made this fantastic business discovery America?
The failed Indymac and subsequent takeover by the FDIC has garnished a lot of press, fan fare and accolades for the great Sheila Bair and her agency. They came in, shaped up the ship, plugged the holes, hired a new crew and homeowners were sailing in loan modification paradise.
This takeover and the FDIC’s handling of homeowners went down in the loan modification history books a the “model” for all mortgage servicers to follow.
Screech…..Fast forward to today and the now. Please scroll below and take a look at who owns this bank now. There you will see who is in control of loan modifications and loss mitigation. It sure isn’t the great Sheila Bair anymore.
”Part of the frustration in working with them is it doesn’t seem like they’re doing their due diligence to help these homeowners stay in their homes,” said Michele Taylor, co-executive director of the Northwest Side Housing Center. “They kept repeating that investors don’t allow modifications.
“We have not seen one modification come through from IndyMac. IndyMac is supposed to be the role model. We’re seeing borrowers who can pay $1,800 to stay in their homes and IndyMac seems unwilling to work with them.”
Instead, borrowers say they are first stuck in a circuitous maze of paperwork and phone calls, and then their modification applications are denied. Borrowers are not told why they were denied, how much income they need to qualify or who the loan’s backers are, counselors say.
Why is this happening, when Indymac is supposed to be the role model for all mortgage servicers? Do the new Wall Street owners have a secret agenda? Like owning as many homes as possible?
Indymac was sold by the FDIC back in January to a seven-member group of Wall Street power players who agreed to buy the failed lender IndyMac Bank, a symbol of the U.S. housing boom and bust, for $13.9 billion. The holding company led by Steven Mnuchin, co-chief executive of private equity firm Dune Capital Management and group of five investors had formed a partnership, called IMB Management Holdings LP, that includes Dell Inc. founder Michael Dell’s investment firm, MSD Capital. Other investors in the partnership include five private equity firms or hedge funds: J.C. Flowers & Co.; Stone Point Capital; Paulson & Co.; a fund controlled by billionaire George Soros’ Fund Management; and a fund controlled by Silar Advisors LP.
Paulson’s $13 billion Advantage Plus fund, his largest fund that’s designed to bet on takeovers, restructurings and other corporate events, rose 33.5 percent this year through November, Bloomberg data showed.
John Paulson in September was considering buying newly issued shares or convertible bonds in financial institutions that need capital, the Financial Times reported Sept 8.
Dune was co-founded by Steven Mnuchin after he left Soros Fund Management LLC in late 2004. Mnuchin was head of a unit at Soros that provided financing, including mezzanine, asset-based and real-estate loans. The team also traded distressed debt.
Prior to joining Soros in 2003, Mnuchin, 46, was vice chairman of ESL Investments Inc., the hedge-fund firm run by Edward Lampert. ESL is the largest holder of Sears Holdings Corp., on whose board Mnuchin sits.
Before ESL, Mnuchin spent 17 years at Goldman Sachs Group Inc., becoming a member of the firm’s management committee. He retired from Goldman at the end of 2002.
These guys are Wall Street bred and do not have one Main Street bone in them. I can almost guarantee that we will see this happen with Indymac from here on out with these fat cats at the loan modification helm.
The FDIC, Ms. Bair, PLEASE HELP!!!
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Most interesting. In the “old” Indymac, prior to the buyout by the investor group, loan modifications were done fairly well, up until the end of 2008, say November on. I was one such borrower, who was told in Oct I was approved, docs never came, then told the new owners would not approve any modifications. Why? One story, yet to be verified, is that with the new owners take the loss if they do a loan modification and write down interest rate or principal, but with a foreclosure, they are insured for that loss. Hmm, so why modify a loan and take a hit, when you can foreclose and get paid in full? Maybe now we understand why the new owners are not making loan modifications. Sadly, most Indymac loan home owners better go get lucky in Vegas, or start talking to realtors about short sales. This is Wall Street playing “Gotcha” with both the Gov’t and home owners.