Does this sound like it would be a problem? IndyMac, a Top 10 mortgage lender nationally, had been No. 1 in loans to so-called Alt-A borrowers, typically small business owners with good credit scores who wrote off their expenses so aggressively that their tax returns showed little income. The lender made mortgages to those customers without documenting their earnings. What happens when the tax man and the bill collectors come?
The irony of it all is that IndyMac might show little or no income, while small business owners know very well that there must be some income before one can expense off the purchases. There must be something to expense it against. IndyMac revealed huge third-quarter losses, saying real estate speculators were defaulting on its 100% financing packages and Wall Street investors continued to back away from buying the nontraditional loans that had been the specialty of the Pasadena savings and loan.
Real estate speculators are business people too. Shut it down, close the doors, and walk away. Let’s all assume the deals were covered by mortgage insurance – either lender paid or buyer paid. Sure they were.
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This article, Indy Mac Sings the Mortgage Blues as speculators walk, is just one of our articles from our Mortgage Crisis Daily
The Subprime Mortgage Crisis Before, During, and After
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