Archive for the ‘Bank Watch’ Category

FDIC Pares Loan Loss Aid for Bank Buyers

April 13, 2010

In February, 2010 I posted a Page entitled “Foreclosure Profits Beat Loan Mod” in which I reviewed the IndyMac Loan Purchase Agreement and Loss Sharing Agreement between the FDIC and OneWest Bank.  These are evidently templates that the FDIC devised during the Resolution Trust era of the 1990s.  The issue is whether these arrangements are fair or reasonable in practice.  OneWest Bank, which bought out IndyMac in March, 2009, was involved in a short sale case that was disseminated over the internet.  It was shown how, after reaching a threshold, OneWest gets a built in profit at the expense of the FDIC whenever there is a loss on a purchased loan.   Among the many implications is the effect such sweetheart deals will have over the long term on the general public.   Several major investors in OneWest already profited from the subprime mess, and now stand to reap obscene profits in this phase. 

The spotlight went off after about a week, the video is no longer readily accessible, and the FDIC simply published a statement that the bank needs to incur a minimum loss amout before it can start taking profits from losses.  In the March 27-28 weekend issue of the Wall Street Journal I found this article by Matthias Riekker with the above title indicating there are 94 of these loss sharing agreements outstanding that back $122 billion of assets.  There were 175 bank failures in 2009 and 41 in the first quarter of 2010.  The way these matters are handled continues to have an important impact on the average person and deserves careful scrutiny.

Bank Profits – One West $1.6B

February 21, 2010

One West Bank recorded a profit last year of $1.6 billion [see LA Times Business 02/20/2010].  The FDIC stands to lose $11 billion.  This one year of profits was more than OWB paid to buy predecessor Indy Mac from the FDIC in March of 2009.   OWB’s feeding frenzy is being fueled by rampant foreclosures and turning loan modifications into a farce.  Your personal experience by way of comment would help document.

Why do Banks Prefer Foreclosure?

February 16, 2010

A video appeared February 8, 2010 by a group called “Think Big, Work Small”.   The subject matter of the video is a case history of borrowers  who, by virtue of a series of agreements between One West Bank and the FDIC that were entered into when the failed IndyMac Bank was taken over by OWB last year, completed a short sale that resulted in an estimated 34% profit for OWB.  To add insult to injury, the borrowers had to sign a promissory note to OWB for an additional $75,000.  I studied the situation and wrote an article summarizing the highlights (see companion Page on this blog “Foreclosure Profits Beat Loan Mod”.  It does appear that the loss sharing arrangement between FDIC and OWB facilitates quick, easy and virtually guaranteed profit maximization by foreclosure.  What do you think?